NEW ORLEANS — The co-founders of Tesla Motors Inc. yesterday invited executives of the nation’s dominant utilities to partner with the Silicon Valley electric carmaker to boost battery storage capacity across the U.S. power grid.
Speaking before the year’s largest gathering of power industry executives, Tesla CEO Elon Musk and his chief technology officer, JB Straubel, addressed nagging anxiety in the room that massive investment in storage technology that further enables rooftop solar power threatens utilities charged with maintaining the electric grid.
In remarks seen as partly a sales pitch for Tesla’s latest expansion into utility-scale battery technology, Musk pressed the point that storage can help utilities balance and protect the electric grid as new sources of generation come online.
"What we would like to do is engage in a dialogue and say, ‘How can what Tesla does be most useful to the utility industry?’" Musk said. "’How do we build stationary storage technology that helps to take things to a whole new level?’"
The panel discussion before a packed ballroom here came at an important moment. Investor-owned utilities that for decades have controlled power distribution over large service territories face a double whammy: flat electricity demand as technology enables greater energy efficiency and the rising costs of strengthening the aging power grid and making it cleaner. With the cost of installing solar panels on roofs dropping quickly, the power-sector giants here at the Edison Electric Institute conference are grappling with competition from companies such as SolarCity, where Musk is also chairman of the board. They’re also looking for a clearer line of sight into how shifting consumption patterns affect electric reliability.
Tesla this spring rolled out a new division called Tesla Energy, anchored by a home battery product to be paired with rooftop solar panels and a utility-scale battery pack to help utilities shore up substations and distribution facilities (EnergyWire, May 6). The announcement came after several weeks of hype in April around Musk’s battery expansion and nearly two years of quietly working with utilities on the technology.
Tesla is best known for sleek electric vehicles. Building higher-performing battery packs for cars served as a starting point for getting into the energy business, where large-scale energy storage at an affordable cost is considered the holy grail for protecting the grid during disasters and enabling cleaner forms of energy.
By the beginning of next year, the Palo Alto-based company will start moving some of its battery production to its "Gigafactory," the name Tesla has given to the largest battery manufacturing plant in the world, under construction in the Nevada desert.
By early May, within a week of making its announcement, Tesla had received 38,000 requests for its new home product and 2,500 for what’s called the Powerpack, the large-scale utility and commercial installations.
Musk and Straubel were among a growing number of attendees who see the widening array of energy technologies reaching customers as less a threat than a business opportunity for utilities.
"Increasingly, we’re going to see batteries as the most cost-efficient option to actually increase the capability of the distribution system," Straubel replied, "and that doesn’t even take into account the resiliency benefit. It’s cheaper than building a transformer or putting in more wires in a region."
Theodore Craver, CEO of the large Southern California utility Edison International, urged other utility heads to work with regulators to integrate technology and ensure a smooth transition to more distributed generation. And in speaking to Musk, he said there are plenty of efforts at his utility to build more flexibility into its massive distribution network.
"There could be a nexus between what you all are doing and what utilities are doing," Craver said.
Straubel challenged "conservative estimates" for how fast Tesla can drive down the cost of electric car batteries and utility-scale storage simply by scaling up production. "The growth curve in these kinds of markets is so much faster," he said. "It’s orders of magnitude more demand that we’ll see from vehicles and the grid than what people use in their cellphones and computers. That’s going to drive down prices much faster than what people expect."
