Tesla battery heralds beginning of the end for fossil fuels

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The launch of Tesla’s Powerwall puts fossil fuels on the defensive, fighting the new normal of cheaper renewable supplies and storage.

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The Conversation

While wind and solar power have made great strides in recent years, with renewables now accounting for 22% of electric energy generated, the issue that has held them back has been their transience. The sun doesn’t shine at night and the wind doesn’t blow year-round – these are the mantras of all those opposed to the progress of renewables.

Now the renewable power billionaire Elon Musk has just blown away that final defence. Last Thursday in California he introduced to the world his sleek new Powerwall – a wall-mounted energy storage unit that can hold 10 kilowatt hours of electric energy, and deliver it at an average of 2 kilowatts, all for US$3,500.

That translates into an electricity price (taking into account installation costs and inverters) of around US$500 per kWh – less than half current costs, as estimated by Deutsche Bank.sqhqhmzc-1430796727

That translates into delivered energy at around 6 cents per kWh for the householder, meaning that a domestic system plus storage would still come out ahead of coal-fired power delivered through the conventional grid.

What’s more, Musk is going to manufacture the batteries in the United States, at the “gigafactory” he is building just over the border from California in Nevada. He is not waiting for some totally new technology, but is scaling up the tried and tested lithium-ion battery that he is already using for his electric vehicles.

Not just for homes

Now the fossil fuel companies – from fuel suppliers such as coal miners to coal-burning electric power utilities – will be on the defensive, fighting the new normal of cheaper renewable supplies and storage. Instead of asking “can we have our own energy system?” communities will be asking “why can’t we have it?”

The Tesla Energy system launched last week is comprehensive, with global ramifications. The Powerwall system offering 10 kWh is targeted at domestic users. It is complemented by a commercial system termed the Powerpack offering 100 kWh storage, and a stack of 100 such units to form a 10 megawatt hour storage unit that can be used at the scale of small electricity grids.

Whole communities could build micro-grid power supply systems around such a 10 MWh energy storage system, fed by renewable energy generation (wind power or rooftop solar power), at costs that just became super-competitive.

At his launch last week, Musk maintained that the entire electric power grid of the US could be replicated with just 160 million of these utility-scale energy storage units. And two billion of the utility-scale units could provide storage of 20 trillion kWh – electric power for the world.

The revolution begins

It is instructive to put these numbers in context. There are already around 2 billion cars and commercial vehicles on the world’s roads, and nearly 100 million new vehicles are being added every year.

If it’s feasible to build these exhaust-pumping complex machines, it’s certainly feasible to build the storage units that will help to make them unnecessary. What’s more, Elon Musk has just announced that he intends to do so.

Musk is a Henry Ford-style figure who takes others’ innovations and scales them up, taking the breathtaking entrepreneurial leaps that others can only dream about. Suddenly the world of renewable energy just moved to become the new normal – because when combined with cost-effective storage it becomes unbeatable.

Musk will not be alone. Already China is gearing up to be the world’s renewable energy superpower, with the largest installed base of wind power and probably by this year the world’s largest installed base of solar photovoltaic (PV) power, as well as by far the world’s largest manufacturing system for wind turbines and solar photovoltaic cells.

There are already Chinese companies such as BYD producing their own energy storage units based on lithium ion technology for both domestic and commercial usage – although not as sleek nor as cheap as the new Tesla offering.

But give them time and they will be producing at comparable scale and cost, or bettering it. This is capitalist competition – and its propagation is what makes Tesla’s announcement the start of the real renewables revolution.

No going back

What about Australia and the sorry state of affairs in which the Abbott government can see nothing beyond coal exports and does everything it can to halt the transition to renewables? Tesla’s announcement has just shifted the ground beneath their feet.

No longer can anyone in Australia claim that renewables would be “nice” if only they came with storage. Now they do.

A smart government in Australia would be looking to ride this wave and promote Australian renewable technology as a source of wealth for the country in a post-fossil fuel era.

Finally we would be able to move beyond the fruitless debates in Australia over whether to have a carbon tax or not, and move to the more immediate and practical issue of promoting renewable industry and technology.

China has given the world a huge lesson in the business-like way it has gone about building and promoting its renewable energy industries, importing technology from around the world and now improving on it as well, and scaling up production so as to drive down costs.

Now Musk and his Tesla Energy have just taken that process one decisive further step, to encompass storage as well as renewable power generation. From here there is no going back.

John Mathews is Professor of Strategic Management, Macquarie Graduate School of Management at Macquarie University.

This article was originally published on The Conversation. Read the original article.

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  1. john 4 years ago

    When an early adopter of storage like Vector in NZ are going to use the Tesla Powerwall and they have been in this business now for several years, so have a good understanding of the requirements, it speaks volumes for this product.
    This is squarely aimed at the domestic consumer who may have some 3 to 5 kw of PV installed and instead of exporting for 6c can store it an utilise it during the peak usage period after 4 pm to 10 pm.
    I think 2 of these would be a better solution which should be able to supply 3.6kw of power sufficient to run the high energy demand of cooking, and small heating or cooling.
    Large AC with upwards of 8 kw of demand would have some management problems, if started with battery power only, so perhaps once such a system was up and running with the cooling of the living area stabilised the battery packs should cope.
    For the electricity retailers they will immediately be asking to implement TOU tariff with the story that it gives consumers choice.
    What TOU will do is hasten the uptake of storage due to the high cost of power at the real peak which is evening.
    I can see groups of people getting together and installing community micro grids with storage so that all can benefit not only those with sensibly designed houses.
    The typical development type structure takes very little care with orientation of the house and in the main just copy plans for housing built in north American not at all suited for Australia bar Victoria and Tasmania.

  2. john 4 years ago

    As I see it using 76% of the output for the system over 10 years not only does it pay for itself in 5 years but also pays for a replacement easily and remember the replacement will be cheaper than the original.
    Assumptions used cost power 35c KwH 350 cycles year 80% of nominal KwH power used cost of system $10,000, now I bet that it can be done for less than this right now.

  3. Jacob 4 years ago

    Yeah this is a pivotal moment in history.

    Like when the Berlin Wall came down.

    Or when Emperor Constantine was baptised.

    Or when Sputnik orbited our Earth.

  4. Jenny Sommer 4 years ago

    Australia should invest in high altitude wind energy (take the money you are wasting on this royal nuclear joke of a commission) and start building a renewable industry on its own. Germany is earning billions with wind turbine exports and wholesale power is getting cheaper and cheaper. The time the EEG runs out Germany will enjoy the lowest power costs a country ever had.


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