Who's reserving all those Tesla (NASDAQ:TSLA) batteries and what do they plan on using them for?
This is Part I of a five-part series examining various applications for Tesla’s batteries.
When Elon Musk announced the advent of Tesla Energy’s (NASDAQ:TSLA) new line of stationary batteries on Apr. 30, you couldn’t actually buy them. Tesla is just gearing up to make the batteries and, according to news reports, the batteries won’t be available for shipping until later this year — but the company is taking reservations. Elon Musk, in a recent conference call, claimed that Tesla has taken a billion dollars of reservations for batteries, which is more than it can deliver in all of 2016. It’s currently unknowable how many of those reservations will turn into actual sales, but if most of them come through, the launch of the Tesla stationary battery line will rank as one of the leading product introductions in the history of American industry.
Undoubtedly, few new product introductions have been as extensively reported on as the Tesla batteries. Much of this reporting focused on the potential of the batteries to be used for residential solar storage. That’s not surprising, given that the temporal nature of solar power combined with the lack of economic technologies to store it is one of the biggest obstacles to achieving widespread use of increasingly inexpensive photovoltaic technology. In some countries, such as Australia, it’s been reported that Tesla is targeting the solar storage market in a big way. However, in the U.S., Tesla is not targeting this market. Here, it’s unlikely that any more than a trivial number of homeowners will purchase batteries from Tesla, or its competitors, to store solar electricity on a regular basis for evening use. Indeed, I’ve written several times now why this application is so unattractive. For one example, see my blog posting titled Utilities, Cheap Batteries Won’t Hurt You, You Have Much Worse Things to Worry About. For another, see Why Tesla won't disrupt utilities.
Another battery application that’s been widely remarked on — storing inexpensive off-peak electric power and selling it to the utility during high-priced on-peak periods — also is unlikely to find many U.S. customers. It simply can’t produce enough revenue to pay for the batteries during their useful lifetime.
If the prospects for these two applications are so dismal, how is it possible that so many people are lining up to buy Tesla batteries? There are three more major applications proposed for the Tesla stationary battery line, and they do have excellent market potential, including: residential backup, commercial demand charge management, and grid-scale storage. These applications are not limited to Tesla batteries by any means, and products from other manufacturers, including LG Chem (KRX:051915), BYD (OTCMKTS:BYDDF), and Samsung SDI (KRX:006400) are also competitive in some of these markets. Look to these applications to drive lots of sales in the U.S. for Tesla and its competitors for many years to come.
SOURCE: Iwan Gabovitch
The people in this picture are not standing in line for the new Tesla batteries. The waiting line for Tesla batteries is electronic, and much, much longer.
Part II of this series will be published tomorrow and examines how Tesla's batteries can be used with time-of-use (TOU) arbitrage.
This series was originally published at www.escource.com.
Jay Stein, Senior Fellow at E Source, is one of America's leading energy technologists. Over the course of his nearly 40-year career he has played numerous roles, including entrepreneur, manager, designer, researcher, and thought leader. Some areas of technical expertise he's well known for include utility emerging technology programs, black box technologies, HVAC technologies, distributed energy systems, and energy storage. He has also authored and coauthored several hundred technical papers, magazine articles, blog postings, book chapters, and conference presentations.