Rivals fear Tesla may become the Apple of battery storage | RenewEconomy

Rivals fear Tesla may become the Apple of battery storage

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Redflow CEO says Tesla’s launch of Powerwall 2 battery with a built-in inverter takes a leaf from the Apple playbook of vertical integration – and could polarise the industry.

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One Step Off The Grid

While cost (down) and capacity (up) have been the focus of much of the hype around Tesla’s newly launched Powerwall 2, the US company’s addition of an inverter to its second generation battery units could also have major market implications.

At least that is the view of Simon Hackett, seasoned cleantech investor and CEO of Australian energy storage company Redflow, which makes zinc-bromine flow batteries and whose newly launched ZCell competes with Tesla’s Powerwall in the residential battery storage space.

In a blog published on his website on Monday, Hackett argues that Tesla’s launch of the Powerwall 2 battery with a built-in AC inverter marks “a clear breakpoint” for manufacturers of home energy storage systems, by taking a leaf from the Apple play-book of vertical integration.

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“As with the Apple product ecosystem, this aims to establish Tesla as a single entry point for energy generation and storage systems in the home environment,” he writes. “Tesla has both the name and the resources to become a strong player in this realm.”

But Hackett believes that this “vertical stance” will take Tesla in the opposite direction to most of the rest of the industry, which has tended to more of a “horizontal” orientation: “a commercial ecosystem that offers choice at all layers of the energy storage system, using standardised interfaces to allow mix-and-match assembly of devices in the solution ‘stack’.”

The move also puts the company into direct opposition to its former allies, says Hackett – both existing inverter/charger vendors, that may be cut out of the Tesla solution set and experienced energy system installers.

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Redflow CEO Simon Hackett with the company’s ZCell home battery

“The Powerwall 2 unveiling is an interesting day for inverter/charger vendors such as Solar Edge, manufacturer of the inverter of choice for the original Powerwall, which is no longer required with Powerwall 2.

“Likewise it is an interesting day for Fronius, which makes a three-phase inverter that supports support the first Powerwall version. The launch also impacts SMA, which recently released its SMA Sunny Boy Storage, a high voltage DC Tesla Powerwall-compatible battery inverter – that is now superfluous to requirements.

“The bottom line for the emerging energy storage sector is that each time Tesla sells a Powerwall 2 with integrated AC inverter, an existing inverter/charger/energy control system vendor books one less sale,” Hackett writes.

“As a result, this new approach from Tesla may tend to polarise the market into two camps over time – with a distinct sensibility developing that is akin to the long-term battle of Apple vs Android in the smartphone market.”

Hackett says he remains confident in Redflow’s future, despite Tesla’s focus on, and achievements in, driving down price.

“Many industries demonstrate that price is not the only factor when consumers decide to buy,” he writes.

“Safety factors such as the thermal runaway potential for many lithium-based battery chemistries are an example of a non-price consideration that can be extremely significant in many markets.

“There is plenty of room in what is now a rapidly expanding market for a wide variety of energy storage alternatives. The bottom line is that Tesla’s presence in this market will drive increased interest in energy generation, storage and use. It will help to deliver further momentum to drive demand and adoption of energy storage systems in general.

“It will also act as a catalyst for other energy generation and storage systems – using a variety of technologies and deployed a variety of physical scales – to each find their own appropriate ‘place in the sun’.”

This article was originally published on RE sister site One Step Off The Grid. To sign up for the weekly newsletter, click here.

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9 Comments
  1. john 3 years ago

    I think the general interest caused by Tesla will bring storage into the vision of potential purchasers.
    The more diverse the offerings the better for the industry now there is a huge market potential to be filled and going forward the installers are going to be very busy.
    Perhaps Elon Musk could be viewed as the 21 centuries Henry Ford both vertically integrated his product, Henry put in place assembly line production and actually paid higher wages to facilitate the purchase of his vehicle.
    Now Tesla is putting the inverter into the battery well no doubt it knows that the offerings have not come down in price enough, so the incumbent manufacturers only have them selves to blame.
    If the product is better than the opposition it should sell especially in the technology area and basically that is what is being sold.

  2. George Darroch 3 years ago

    When the computer market was new, you had to buy all sorts of expensive components and then find someone who had a high degree of skill to put them together (or be such a person yourself). Now, you just walk into a store and put down your card and walk home and unbox. You’d be foolish to think that the consumer market won’t head in this direction. Standalone inverter retailers will need to focus on the commercial market, or stock integrated units.

  3. Geoff 3 years ago

    Tesla have been looking at inverters for a while now and it only makes sense to integrate it into the battery. completely support the approach especially if it’s getting people to buy them and that the transition happens sooner than later. The other thing is that it raises the bar for other companies to perform at that level or come up with something better. In reality, if it wasn’t for Musk, we will still be stuck in the dark ages…

  4. MaxG 3 years ago

    I am not sure what Hackett is on about… it is called competition; Tesla has the better product, who cares, whether another vendor looses out on an inverter sale… the stand-alone inverter is becoming a thing of the past. First the people whine because an extra inverter was needed; now they whine, because you do not need one. But then, it is suppliers whining, certainly not the customer, who now actually get value for money… as in my books, the PW1 was over-priced at any measure.

    • George Michaelson 3 years ago

      Its pretty clear what he’s on about: vertically integrated selling locks out suppliers of components for mixed-source equivalents. Its going to cause changes in the market conditions about more than just price competition, it demands competitive tension explore the choice between sealed solutions and bespoke.

      • MaxG 3 years ago

        It is clear to me (too), and I did not mention price; but competition in general (or should I have said ‘free market’), here on multiple fronts, one you’ve identified.
        He (Musk) has no choice but go on his own, because the rest cannot keep up with the pace for the required speed of change.
        We have already seen the price-gauging: oh you need a special inverter for that. As stated, SMA and Fronius wanted to be a choice, but hey, the PW2 does not need this any more; neither does it need any other impediment to bring on the revolution… and as sort of concluded: this is the fasted and most effective way to the consumer, including fulfilling the mantra of value for money.

        • Mike Dill 3 years ago

          What I see now is the need for a software product to watch the solar production and residential consumption, and charge or discharge the battery based on the real-time situation. I personally do not know of a good residential solution for this currently.

    • Mike Dill 3 years ago

      My gut says that Hackett is in a bind, as his product is much less competitive given the specs and pricing of the PW2. Add in that PW2 includes the inverter, and the total package and install costs go down as well. I think this will be good for the installers, and the end customers, but further up the food chain there will be difficulties.

      FWIW: In my opinion, we should plan for a PW3 in two years, with a similar step change in performance and pricing. That would take the price down to what Elon and JB have estimated will be coming out of the GigaFactory (250kWh package, 150kWh bare batteries).

  5. Kenshō 3 years ago

    A year ago I wrote the post:
    “Battle of the Batteries and Jailbreaking the Powerwall?!?”
    https://onestepoffthegrid.com.au/forums/forum/battery-and-storage/

    Hackett is right. Tesla is seeking to convert the world to its technology and become a monopoly. The Powerwall platform is a very different voltage to the rest of the field.
    In the end, it’s not the biggest cheapest battery that gets the market share. It’s the most “humanitarian” battery company in terms of affordability and accessibility to step into energy independence. Our friends in Africa and China are part of the market. It’s a big market. We all have a say. As Hackett says, we each need to find our “place in the sun”.
    Tesla have had a sales approach to be first for a new cheaper product “announcement” though as Finn Peacock has effectively demonstrated, when the battery actually rolls off the production line, there’s many competitors to match Tesla. And so it should be. The last thing the world needs is a monopoly.

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