As climate change becomes increasingly problematic, the interest and investment in cleaner energy systems such as solar and wind technology increases; however, these renewable energy sources present a number of barriers to adoption. Renewables’ price difference in comparison to conventional energy, difficulty of integration into the existing grid infrastructure, and intermittency issues alienate energy consumers and utility companies . Tesla’s battery storage technology, originally developed for its electric vehicles, provides a solution to make renewable energy more reliable  and has the potential to lead to easier integration with conventional energy grids.
Elon Musk, the CEO of Tesla, has stated that his company’s vision is to be an energy innovation company that strives to reduce the world’s reliance on fossil fuels. He began with the development of electrical vehicles and has expanded the business to include energy storage and solar energy technology . With regards to storage, Tesla has created a lithium-ion battery called Powerpack, and a household lithium-ion battery called Powerwall . These batteries can store energy when wind and solar power is producing at high output and provide energy when renewable energy sources are producing at low or no output, solving the issue of intermittency for utility companies and households. These applications are simply the beginning, as Tesla has plans for expansion and the development of a clean energy grid utilizing its storage technology.
Short Term Growth Plan
In the past year, Tesla has opened a Gigafactory to produce batteries for both its electric vehicles and energy storage products. By 2018, it plans for the Gigafactory to produce 35 gigawatt-hours of annual production. The increase in local production capability allows Tesla to deploy its energy storage technology more rapidly in the United States as demand for renewable energy increases . It also has the potential to catalyze more adoption of renewable energy systems with easily accessible storage.
Additionally, Tesla recently agreed to build the largest lithium-ion battery in South Australia to support their local power grid. The battery will store enough energy to power 30,000 homes and prevent the power shortages previously encountered in the region . As more countries install renewable energy and more governments incentivize the use of renewable energy, the demand for these large batteries is likely to increase. This application will also prove that battery storage is capable of supporting a large-scale renewable energy grid reliably.
Long Term Projections
The next step for Tesla in energy storage is to aggregate its existing technology for larger applications in utility networks globally. Bundling of the Tesla batteries is planned to develop a cleaner energy grid, where customers can both use and distribute power from their household Powerwall batteries to the grid’s Powerpack batteries. Tesla has formed a partnership with Green Mountain Power in Vermont to pilot this program. It will install 2,000 Powerwall batteries in households and projects that energy costs will be lower for the consumer as a result. Tesla plans to expand these partnerships globally in the long term with utility companies, grid operators, and energy retailers .
Improvements to Achieve Widespread Adoption
The largest limitation of energy storage technology is the cost. Last year, it was projected that Tesla would sell $500 million in batteries and achieved well below the target because the cost is inaccessible for many potential customers. In 2015, batteries were utilized by only 450 U.S. homeowners, 250 U.S commercial property owners, and 24 utility projects, showing that there is a large opportunity for expansion . Tesla should invest more money in research and development to drive the cost of batteries down more rapidly and engender broader use of battery storage. This will allow for less reliance on government support for adoption of renewable energy.
As climate change continues to threaten our environment, Tesla will need to address a number of questions to adequately support the deployment of cleaner energy solutions. These two questions are of primary concern:
- How will Tesla make energy storage more affordable and accessible? Will it adopt different energy storage technology to achieve this goal?
- Will Tesla’s aggregation of its energy storage technologies create a clean grid that is easily integrated into the conventional energy grid? Is it essential to achieve this compatibility?
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