Musk’s SolarCity First in Line for Tesla Batteries

(Bloomberg) — Elon Musk, the billionaire entrepreneur who

unveiled his “Powerwall” home battery Thursday, is already

offering them to SolarCity Corp. customers seeking backup supply

when the grid goes down.

The battery “replaces noisy, dirty fossil-fuel generators

with zero-emission storage technology,” SolarCity said Thursday

in a statement. Musk, whose Tesla Motors Inc. developed the

product, is also chairman of the San Mateo, California-based

solar supplier.

Musk is expanding beyond electric cars to sell batteries to

homes and businesses seeking reliability as the grid absorbs

more clean — yet intermittent — energy. Tesla’s battery can

store power at peak production and dispense it later at less

than half the cost of current systems, according to SolarCity.

“The mainstreaming of storage solutions may ultimately

spur a transformation in how electricity is produced,” Pavel Molchanov, an analyst at Raymond James Financial Inc. in

Houston, said Friday in a note to clients. “Tesla’s focus on

behind-the-meter opportunities means that it’s getting into the

newest, least established component of the storage space.”

“In contrast to the century-old model of centralized power

plants and long-distance transmission lines, the rise of

distributed generation” can in the “very long run lead to the

obsolescence of the traditional utility model,” Molchanov said.

‘Fusion Reactor’

Musk is seeking to solve this issue with a battery that

costs more than 60 percent less than previous residential solar

power storage systems, SolarCity said in the statement.

“We have this handy fusion reactor in the sky called the

sun, you don’t have to do anything, it just works — shows up

every day and produces ridiculous amounts of power,” he said

Thursday at Tesla’s product announcement.

“The obvious problem with solar power is that the sun does

not shine at night,” Musk said. “The issue with existing

batteries is that they suck, they’re really horrible.”

SolarCity is offering two payment options. For a 10

kilowatt-hour system, customers can prepay $5,000 for a nine-year lease, which includes installation, a maintenance

agreement, the electrical inverter and control systems, Jonathan

Bass, a spokesman, said in an e-mail Friday. Customers can also

buy the same system outright for $7,140, Bass said.

Business

For businesses, SolarCity will incorporate the Tesla

batteries into its DemandLogic storage system, which is used to

dispense stored power when prices are high. It will also use the

batteries in its GridLogic service that provides clean power to

remote communities.

Tesla will also work with the energy software company

EnerNOC Inc. to use the batteries to offset power use in

commercial and industrial buildings during periods when grid

power is in high demand, starting with select EnerNOC customers

in California, the Boston-based company said Friday in a

statement.

“Batteries, solar projects and other on-site energy

systems — that’s the muscle that’s being put in the system and

EnerNOC’s software is the brains to make all that muscle work,”

Tim Healy, EnerNOC’s chief executive officer, said in an

interview Friday.

SolarCity began taking orders for the Tesla batteries

Friday and expects to deliver them in October. The company had

been installing power storage systems on a limited basis.

More Opportunity

Black & Veatch, an infrastructure builder, plans to work

with Tesla on building power storage systems for commercial and

industrial customers, the Overland Park, Kansas-based company

said Friday in a statement.

SunPower Corp., the second-largest U.S. solar manufacturer,

began offering power storage systems to customers in new homes

built in California by KB Home last June.

“To the extent that Tesla does a great job, that’s good

for that emerging segment and that’s good for SunPower,” CEO

Tom Werner said in an interview. “I’m excited. The larger the

market, the more opportunity there is.”

Sunrun Inc., a SolarCity competitor, also will sell Tesla’s

home battery system, the company said Friday. The Vermont

utility Green Mountain Power Corp. also plans to offer the Tesla

battery system, it said in a statement.

Musk owns 21.4 percent of SolarCity and is the company’s

largest shareholder as of Apr. 23, according to data compiled by

Bloomberg. He owns 22.4 percent of Tesla, as of Dec. 31.

(An earlier version of this story corrected SolarCity

Corp.’s name in the first paragraph.)

To contact the reporters on this story:

Louise Downing in London at

ldowning4@bloomberg.net;

Ehren Goossens in New York at

egoossens1@bloomberg.net

To contact the editors responsible for this story:

Reed Landberg at

landberg@bloomberg.net

Amanda Jordan

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us