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Elon Musk’s first victim was the petrol car; now it’s old style utilities

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Six months ago, Tesla founder and CEO Elon Musk signalled the end of the internal combustion engine when he unveiled what was then hailed as the world’s first “mass market” electric vehicle, the Tesla Model 3.

On Friday, in Los Angeles, Musk unveiled the latest elements of his plan to lead a global push to 100 per cent renewable energy – a solar roof shingle and the second generation of his home and utility scale battery storage offerings.

tesla musk shingle

It was revealed with a lot less fanfare and a lot less pizazz than the Model 3, and the models S and X before it, but the launches of the solar tile and the Powerwall 2 and the Powerpack 2 are no less significant.

Firstly, it signals a change in thinking about how to integrate solar energy. Built-in solar PV (BIPV) will become ubiquitous in rooftops, windows and even walls. Musk is not the first to bring solar roofs to the market, but because of his company’s marketing cache, he is the first to bring it to the mainstream.

Secondly, it underlines just how quickly battery storage costs are falling, and this is key to changing the way we think about electricity and the way it is produced and delivered.

The incumbent utility industry is basing the slow evolution of its business model on the assumption that battery storage costs will not match the fall in the cost of solar PV. Maybe, they say, the costs might fall 10-15 per cent a year. It’s pretty clear, at least in the case of Tesla, that they have nearly halved in just a single year.

tesla powerwall 2The Powerwall 2 (now rectangular, see left) packs twice the energy of the first model (14.5 kwh), but because it now includes inverters and other software integration, its installation price is not going to be significantly more expensive than the original price for the Powerwall 1.

And, of, course, Tesla is not the only company bringing down battery storage – its competitors are also achieving significant cost cuts to stay ahead of the game, and as manufacturing costs fall.

The announcements of the solar roof and the new battery storage produces are the second and third elements of Musk’s plan for the world to become 100 per cent renewable energy. He imagines homes with solar on or in their roofs, and battery storage and electric vehicles in the garage. “It’s really not that complicated,” he says.”

But it does turn the current thinking about energy systems upside down.

Electricity will be largely “distributed” rather than centralised, meaning it will come from local sources, such as rooftops and community level projects, rather than a centralised generator hundreds or even thousands of kilometres away.

The system will act in a different way. Rather than shifting supply (switching coal, gas and hydro generators off and on) to match demand, the focus will shift on shifting demand to match supply. This will come from storage, load shifting and demand response, which will play an increasing role in a smarter, more responsive grid.

The system will be cleaner. Where centralised generation continues to be used, it will be based around renewables – particularly wind and solar. Coal and eventually gas fired generation will find themselves sidelined and then redundant.

And the power will shift from centralised oligopolies to a kind of energy democracy. If only because most consumers will have so many different options, but most of all the ability to generate, store power themselves and share and trade power with their neighbours and peers.

And no, it won’t happen overnight, but it is likely to happen a lot more quickly than most expect – particularly the conservative politicians who insist that coal fired generation will last for decades to come.

Musk gave us a taste of this thinking in his presentation. He says a world of 100 per cent clean energy means that all its energy needs will come from electricity – around one third transport, one third heating and manufacturing uses, and one third electricity.

And he expects local generation – and by that he means predominantly rooftop and local solar and battery storage – will account for one third of all electricity needs.

Utilities will still have a role, he said, because they will be needed to generate and transport the remaining two thirds from the source to demand. But the model will obviously change, in some cases quite radically, because their delivery costs cannot occur at the prices charged in Australia, for instance, where things have gotten completely out of control.

Musk’s message is that technology is driving this transition, and so too is the need to address climate change. He began his presentation in front of a graph showing the rising levels of Co2 in the atmosphere, to their current levels of 404 parts per million. “Global warming is a serious crisis and we need to do something about that,” he said.

And his message is – and it is rapidly dawning on consumers, to people in industry, and even to politicians – that while this is a challenge, it does not mean more expensive or unreliable energy. In fact, the opposite is true.

What’s more, it can be fun. Musk says electric vehicles did not look good, had low range and lousy performance. They were golf carts. His Tesla range changed that, and the industry with it.

Musk now wants solar roofs to become as attractive and desirable as an electric car. “We want solar roofs that look better than normal roof, generate electricity, last longer” he says, and where the installed cost is less than that of a  normal roof and the cost of electricity. “Why would you buy anything else.”

Musk sees the potential market as 5 million new roofs being built in the US each year, and presumably the tens of millions being built elsewhere. But the unveiling was short on technical details and cost. We do not know, for instance, the efficiency of the solar shingles or how much electricity they can deliver to the household. The company promises we will hear more of that later if the merger with Solar City goes through.

Musk is right about the shingles looking good, and it will be interesting to see if he finds it more difficult to break into the roofing market than he did into the motor market, given that this product will only be good for new roofs (there are five million of them in the states each year) and replacement roofs. As Greentech Media observes, this in an inherently conservative industry.

So too, however, was the motor market, which had a lot to protect – exclusive distribution, servicing, repairs and fuels – that Tesla threatened. But Tesla found a way through that.

Again, there is no telling whether it will be Tesla products that dominate future energy markets, whether his company will prosper long term or whether the merger with Solar City will succeed. It doesn’t actually matter.

Musk is identifying the mega trends and getting in early, with a branding that cuts through to the general population in ways that no other EV manufacturer, battery storage maker or solar manufacturer had been able to do. Others will follow and make a success of it, because the trend is clear.

Musk understands the power of making a product look desirable. And he is coming up with a new catchline that sounds a lot more appealing than the Coalition’s dull focus on “energy security”, which they mean to be coal and gas.

Musk breaks it down a different way – “beautiful, affordable, integrated”. As Musk says himself, “why would you do anything else?”  

  • trackdaze

    But what about all that coal and oil in shareholdings and super funds?

    • Ren Stimpy

      Stranded assets.

      • trackdaze

        If they are stranded they cease to be assets.

        • Ren Stimpy

          Well yes eventually. Sooner rather than later.

    • Charles

      I guess switch your super to a fund that doesn’t invest in such things, so that it is not your problem.

      • trackdaze

        Good advice.

    • neroden

      Get out of those funds. NOW. I got out of all stocks and funds which contain coal, oil, or natgas back around 2008, and I got out of most of my utility company holdings a bit later. (I still hold some utility companies as part of conglomerates which are mostly other things.)

  • Sunbuntu Ltd

    Fitch just had a warning that new battery technology will cause problems with Utilities;

    “Fitch: Battery Advances Could Polarise Utility Sector”
    https://www.fitchratings.com/site/pr/1013910

    • Valdis Dunis

      Or more accurately cause problems FOR utilities. Us consumers will benefit, and sure many utilities are reading up on avoiding a repeat of Kodak’s demise.

      • Alastair Leith

        and in Kodaks case they invented the digital camera sensor and we number one in the domestic/consumer camera market for many years before phones and flat footedness caught them out. Gentailer utilities have not even these advantages.

  • Brunel

    His product launch also signalled the end of neckties – which are unnecessary, cost money, and cause pollution to be emitted during production, shipping, retailing.

  • Brunel

    His product launch also signalled the end of neckties – which are unnecessary, cost money, and cause pollution to be emitted during production, shipping, retailing.

    • Andrew

      We will know that we will really have adopted innovation and disruption when neck ties have been consigned to the rubbish tip. Haven’t worn one in decades and not likely to don one again.

  • Stan Hlegeris

    4th paragraph: I suspect you mean “cachet” rather than “cache.”

  • Chris Fraser

    Doesn’t Mal wish the Innovaton Economy could have a few Elons ?

    • Hayden

      Not too sure about that. I don’t think he would be a LNP donor

      • Chris Fraser

        ROFL !

    • Brunel

      Luckily Mr Musk has 5 kids.

  • Hayden

    On the way to global domination. Can’t wait.

    • MaxG

      Musk for US President 🙂

      • Calamity_Jean

        He’s not eligible under the US Constitution. Besides, Mr. Musk does more good where he is than he could as President.

        • MaxG

          Agree with you 🙂

        • Alastair Leith

          actually given the two choices he’d do pretty damn fantastic I suspect.

  • Hayden

    “Global domination”. And Mars as well.

  • David Boxall

    From the perspective of a rural Australian, my concern would be the quality of drinking water collected from a solar PV roof. I know it probably sounds trivial, but would you like to take a risk on poisoning your family?

    Another issue: weight. The underlying structure of a metal roof is not very robust. Replacing corrugated iron with solar tiles/shingles might be more expensive than you’d think.

    • nakedChimp

      Why would you poison yourself from drinking water that has been collected on solar shingles (which expose glass) or solar pv modules (which are exposing aluminium dioxide and glass)?

      You think colorbond paint coat is better?

      You know that some dishware is made of glass?
      Ever heard of someone being poisoned by taking in aluminium dioxide?

      Do you got copper water piping in your house?
      You know what I use copper on my job?
      I use it for poisoning filter elements in water measurement devices (tipping buckets, water sondes for ph/salinity) so they don’t clog up as mould can’t grow – nothing settles on them.

      PS: I got PE water pipes in my house – same stuff they use in Europe for distributing drinking water or what our water bottles are made of 😉

      • David Boxall

        “Why would …?” I’ll be interested to hear your answer to that question. What might the issues be? You can’t substantiate any of what you assert, can you?

        “You think colorbond paint coat is better?” It is recommended for collection of potable water. http://rainharvesting.com.au/knowledge-center/roof-surface/

        As the issue is not addressed in the article, there’s no reason to assume that it’s been considered.

        • Steve

          You can be pretty sure that the glass tiles would provide potable drinking water – it is basically a variation on two way glass.

          As for weight – it is basically glass so it is gonna be heavy. Probably not going to work as a replacement for a good old Aussie corrugated iron.

          Over time perovskite solar panels will become more efficient. Your corrugated iron roof will have a protected coating of perovskite.

          • David Boxall

            There are various forms of glass, with different chemical properties. There’s also more to those tiles than just glass. I’ll wait for the manufacturers to actually consider the issues.

          • Alastair Leith

            yeah a company like Tesla never considered environmental pollution. they dont even need permits to sell them, sheeze.

          • neroden

            These are inert tempered glass.

            They aren’t anything stupid like leaded glass, be reassured.

          • David Boxall

            The surface may be glass, but the surface is not the entire tile. My corrugated iron roof bears damage from cricketball-size hail. What will be exposed when (not if) the tiles are broken?

            I’ll wait until I see the issues formally addressed.

      • neroden

        PE is not the best stuff — it bleeds organic toxins into the water, albeit very slowly. Copper is used for water pipes specifically to kill germs and to provide necessary nutrients to people (namely, copper).

        Lead pipes, on the other hand, are evil.

    • Alastair Leith

      how’s those old lead joins on your flashing David?

      • David Boxall

        Lead on corrugated iron? Google “electrolytic corrosion”.

    • neroden

      Solar panels and Musk’s solar roof are *glass*. You’re going to have rainwater as clean as it was when it was in the air. Safer than metal roofs, *much* safer than asphalt or tarpaper roofs (Which are full of all kinds of crap), safer than wooden roofs, FAR safer than anything involving lead… you get the idea

  • Ian

    Musk is a great guy, a real doer, but his greatest achievement may well be getting others off their comfy rears to compete in the EV, solar PV and battery storage industry.

    Will his companies be the Hoover, or Nike, or Apple of his target industry?

    • Geoff

      This is precisely what he is trying to do and encourages it.

    • Miles Harding

      I love seeing the boot go into those backsides in this way.

      Nike, Apple and Hoover’s business goal is to collect pots of gold, but Musk is on a (what feels like) one-man crusade to save the planet.

      All the gold-seekers out there are being turned on their heads and forced to participate in Musk’s agressive plan to decarbonise before we perish.

      • BrianLandon

        uh sure………. and who pays for it? 100 per cent subsidized by taxpayers who are hit with massive increases on their hydro bills. I’ll bet you still live with mummy and daddy too.

        In North America(some areas) and in Europe, your energy bill for home is now 1/3 of your disposable income.

        • Alastair Leith

          1/3 of your disposable income? what part are you calling disposable, dude? Germany, in spite of high wholesale prices have the lowest domestic energy bills in Europe, due to their very EE housing stock.

          agree Musk has been acquiring and looting other companies using US taxpayer moneys, but you have to admit he broke through where others failed and where the car makers were all about killing the electric car.

  • David Hall

    Again we see that Technology and the Market will always decide what happens. Politicians can only help or hinder the outcome!!

    • Alastair Leith

      again the free market capitalist misses the point. germany primed the solar PV pump and wind by introducing very healthy and tech specific FiTs. That got the learnings curve underway. Politics. Greens and Socialist Left Government in Germany did it in 80/90s. That provided the volumes to see learnings curve starting to talk, more than help it started the ball rolling.

  • Miles Harding

    How refreshing it is to see an industrialist’s quest being something other than personal enrichment.

    Elon has really topped the car releases this week!

    First, a battery that is in the range of one third the cost of its competitors. There is a clear message that profiteering will not be tolerated. We all know what the battery should cost and expect to see this reflected locally. The local gougers (you know who you are) will have to do even better than Tesla to have any hope of winning back a social license.

    Second, solar roof tiles. Surprisingly small units, I thought – very flexible in use. They should also be applicable on those ‘designer’ roofs, full of valleys and ridges with almost no flat panels. Strength; the drop test was compelling. Then there’s the price – equal or lower than existing tiles. Maybe they’re worth using, even if not wired up???
    I think he may have blown the roof off this industry. — I’d demand them.

    • Alastair Leith

      yes I’ve been saying for a few years that PV will be ubiquitous in cladding products for buildings at a trivial cost to manufacturers and they’d better include it or loose point of sale relevance. this is one reason why I think that last 10%, the 90-100% of the RE build out wont be as cost prohibitive as many of my better educated colleagues suggest it will. There’s going to be so much excess generation behind the meter when all cladding products are PV as a matter of course that even operating in low daylight conditions at 25% capacity there’s still going to be a large part of demand met, if not all for a health slab of the day time demand curve.

  • BrianLandon

    ah you mean, scandal plagued Solar industry. Lets also show how hydro rates have skyrocketed where government (totally tax payer funded to corporations and political insiders) have created energy poverty. Ontario, Canada has experienced this in the past 10 years, where rates have doubled and tripled. But hey, as long as we keep subsidizing rich folks, thats okay, right?

    • neroden

      Ontario’s funding their white elephant nuclear power plants; that’s the cause of their very high rates. The *actual hydropower* remains cheap, but the nuclear power is super expensive and will continue to be expensive even after the plants are demolished.