The Tesla Energy Batteries are Huge for Solar Power

May 9th 2015

Dante Atkins

Solar power is the gold standard in the effort to transition away from producing energy through fossil fuels that contribute to global warming and pollution. From a human perspective, solar energy is abundant and unlimited, and as technology continues to improve, the efficiency of solar panels goes up and the costs of production go down. All in all, these factors led to a whopping 418 percent increase in solar capacity between 2010 and 2014.

The problem with solar? We can't store the energy.

Unfortunately, the share of energy production capacity attributable to solar is still very low, despite that rapid increase. Solar power only represents about 1.1 percent of total capacity and probably an even smaller percentage of total generation. As the economics of solar continue to improve, that number will go up—but the growth of solar has always been hampered by one major problem: photovoltaic cells can’t produce electricity at night, whereas coal-fired plants can run round the clock. Excess energy produced by a home solar system is either wasted, or has to be sold back to the power grid. Without a reliable, efficient system to store energy for distribution when the sun isn’t shining, the spread of solar can only go so far.

But that problem might just have been solved.

Tesla Battery Close-up

You may have heard of Elon Musk. He built a fortune by founding PayPal and then used his capital to create electric car company Tesla Motors, as well as aerospace company SpaceX. Earlier this month, Musk announced the creation of Tesla Energy, which will build lithium-ion storage batteries for use in private homes, businesses, and even industrial-scale solar plants.  The batteries are designed to be wall-mounted, and they look as sleek and elegant as a Tesla sports car. The ultimate idea is to allow homes and businesses to depend more exclusively on solar power by providing the ability for excess solar power generated during the day to be stored in the battery pack for discharge during evening hours. The batteries can also by linked together to create larger arrays that would serve larger businesses and industrial power generators.

These batteries are still expensive.

Despite a moderate price relative to the rest of the industry, the cost will certainly leave some people out of the market: the battery itself costs between $3,000 and $3,500, and installation and other required electronics could double that expense. And even at that, the technology does have limitations: there are questions about how well it will integrate with existing solar power generators, and its maximum output is still less than what an industry-standard, gas-powered backup generator can produce. The batteries, then, aren’t an ideal solution for people who want to go off the power grid completely.

Tesla Battery

Even so, the demand is staggering.

Tesla Energy will be opening up a massive production plant in Nevada in the coming months, and the company has taken enough reservations on its batteries to sell out through the middle of 2016, to the tune of a possible $800 million in revenue. And industrial-scale production and technological innovation will continue to make the products even more desirable. There’s even appeal for people who don’t have solar systems configured yet. Because power is more expensive during peak hours than it is during off-peak times like the middle of the night, battery users can end up lowering their own utility costs by charging the battery on off-peak hours and using battery power when utilities would charge peak prices.

The batteries can have a variety of uses, but the most important point? Mass production of batteries designed to store energy for solar power systems was the needed breakthrough to make solar energy able to compete with fossil fuels. The batteries aren’t quite where they need to be for most people to achieve full energy independence from coal—but Tesla has taken the first step that the industry will depend on to make the transition possible. That’s a big deal.