Tesla Stationary Storage Investors Thread

[Foghat]

Commercial - DemandLogic | SolarCity

The software running demand logic is Solarcity's as the linked product info material describes. As such, Tesla appears to play primarily a supplier role in this transaction. This might be the same relation to other buyers of tesla's products as well. I think tesla's business model might be to offer the best priced product, to compete on price with the likes of Stem and others. Since over 2/3 of all storage being installed today in California is manufactured by Tesla, they appear to have the most competitive prices in the state, which doesn't mean margins aren't very healthy given the substantial market share already.

 

[Johan]

Great analysis Vladimir and Bonaire!

One small detailed that I have been very happy about ever since I saw the first video and pictures of the stationary storage units is the fact that they are Tesla branded - with the same Tesla logo as the cars. This tells med that Tesla are absolutely planning on keeping the stationary storage businness in the company, and not budding off for now. Great for us investors. Also, as mentioned before teslaenergy.com redirects to teslamotors.com.

 

[bonaire]

Where are you getting $1.75 per watt? The $1.46 per watt that I mentioned in my post is included in the Manual (Para. 1.3, p10):

the 1.46 is bumped to 1.75 by the program giving 20% more incentive to CA based vendors. Tesla is where?

this is how a home system buyer sees $8760 incentive off of 5000W. However, will they see it? They will lease from Solar City and really not be able to buy it unless they offer a buy option. Seems like a lot, but look at prior years, it was $12,000 on a $20,000 install. Now installs are written as an eligible price of $23K and change.

What I also see is that some recent project additions are on the waitlist. When they announce home storage on Apr 30, and Solar City says "available later this summer" I have to think that Tesla may cancel some old reserved monies from 2012-2013 project reservations which have not started to open up incentives for 2015 for new customer demand. Otherwise, it becomes something to put off until more reservable CA incentive money is made available. Of course, that is CA only - they can sell home systems anywhere as long as the installation price is good and people find value in it.

 

[jhm]

This is super, vgrinshpun. In your table, is this really in kWh, not kW? The ratio of incentive to kWh is $1517.20 by my calculation. Might this just be specific to Tesla installations?

It's interesting that the incentives taper of above 1 MW. Do we understand why this program is preferential to smaller projects?

Thanks for putting this report together.

 

[bonaire]

Taper is because a distributed storage and use system is best when distributed. By putting in a variety of multi MW systems, you still end up with less overall grid efficiency than by using many 10KW or smaller units. If the need is to cut down the peak demand curve on the grid mid to late afternoons in hot summer days, the requirement is to use less transmitted electricity and more stored energy at the usage-site. Higher daytime temperatures make transmission lines less efficient. If every office building had a 100KW system they could participate in some load shaving during the hours of employee activity of 2pm-6pm and then home systems could participate from 6pm-8pm. The other problem, though, is conformance with grid demand itself. On a cool day, with low AC needs - the demand curve is much flatter and so the need is to spread out the battery output over the whole 2pm-8pm window.

One thing really necessary is for office buildings to become involved in cooperative electricity demand reduction after 5pm once employees start to leave. Get employees to start turning off equipment like computers and monitors, at least, and lighting as well (or use auto-off light switching). To make a smart grid work, businesses and average people need to also be part of the solution.

 

[yobigd20]

Car batteries that have degraded from 85kWh down to 50kWh will probably be replaced as a car battery

with the way the MS battery pack is designed, you'll probably be waiting 20 or 30 years before that happens.

 

[rallykeeper]

I admittedly quickly scanned, but still hadn't seen anything noted by anyone in this thread (maybe it's elsewhere on TMC?).

I got my email invite last night to the "Missing Piece" April 30 announcement. 8 pm in Hawthorne...

Graphic is of a white 3D rounded square that looks vaguely like an Apple Time Capsule (original version) or maybe a Wink basestation with Tesla emblazoned in the middle.

Here's the device...

 

[Lloyd]

How about a whole house inverter, allowing Generator, PV/wind, Car (V to Grid or V to house) or other battery storage, and Grid if desired. Thus, allowing you to disconnect from your utility, or minimize the use of your utility. Smart, knowing the TOU schedule to maximize the self power generation usage to it's best ability.

 

[30seconds]

How about a whole house inverter, allowing Generator, PV/wind, Car (V to Grid or V to house) or other battery storage, and Grid if desired. Thus, allowing you to disconnect from your utility, or minimize the use of your utility. Smart, knowing the TOU schedule to maximize the self power generation usage to it's best ability.

Now that would be the missing piece!

 

[yobigd20]

How about a whole house inverter, allowing Generator, PV/wind, Car (V to Grid or V to house) or other battery storage, and Grid if desired. Thus, allowing you to disconnect from your utility, or minimize the use of your utility. Smart, knowing the TOU schedule to maximize the self power generation usage to it's best ability.

honestly if that's what it is and it supports all that, i'm sold. seriously.

 

[Ingenieur]

I think before calculating all these 100s of Millions, please check that the total budget for 2015 is 77 Mio ( http://www.cpuc.ca.gov/NR/rdonlyres/9E029D5B-3144-4FD4-925E-3B95FE9CAF3C/0/2015SGIPHandbookV1_Final.pdf ) Page 8, 25% of which reserved for Non-Renewable stuff like Gas Generators. So we have ca 58 Mio potential funding split between multiple parties, is that really worth all this excitement and analysis?

Or do i read it wrong?

 

[Lessmog]

I think before calculating all these 100s of Millions, please check that the total budget for 2015 is 77 Mio ( http://www.cpuc.ca.gov/NR/rdonlyres...E-3B95FE9CAF3C/0/2015SGIPHandbookV1_Final.pdf ) Page 8, 25% of which reserved for Non-Renewable stuff like Gas Generators. So we have ca 58 Mio potential funding split between multiple parties, is that really worth all this excitement and analysis?

Or do i read it wrong?

Now, I must apologise first off that I don't have time to dig deep into the material.

But I much doubt that all of the profit will come from Gov't subsidy.
Rather, most of it will be added value and a changed balance vis-a-vis grid&utilities.

If so, the subsidy is only grease to slide over the threshold easier.

That's my take, anyway. We'll see in a few days. Or months.

 

[Newb]

I know that most of you are concentrating on the US (or even CA only) market, but don't forget that Tesla has become a global player now. They have a perfect distribution network in the biggest and most important markets of the world. As posted further up thread, retail prices of home battery storage for residential solar in Europe amounts to about $1,500 to $2,500 per kwh. I've already posted examples of Bosch or RWE or Samsung systems. Here's one more: Solarworld SunPac Lion 5 kwh currently costs about $11,000 retail: SolarWorld : SunPac LiOn

To remind you: Germany is one of the frontrunners in solar: "The country has been the world's top PV installer for several years and still leads in terms of the overall installed capacity, that amounts to 38,458 megawatts (MW) by February 2015, ahead of China, Japan, Italy, and the United States[SUP]"[/SUP] (Solar power in Germany - Wikipedia, the free encyclopedia)

"Germany set a world record for solar power production with 25.8 GW produced at midday on April 20 and April 21, 2015." (Source: see above)

There's about 1.5 million residential PV systems at present. The feed-in tariffs are coming down year by year. Stationary storage is starting to gain momentum. Virtually every big solar installer has a battery storage system on offer by now.

The thing is, even at those retail price levels ($2,000 per kwh battery storage), there's a ROI after 10-20 years for residents, depending on energy consumption, PV system and so on. Remember that a kwh from the grid costs about $0.30 in Germany.

Now imagine Tesla Energy to start selling a 10kwh home battery for half the price of all of its competitors (let's say $10,000 for the 10kwh) in the German market. They are even eligible for a rebate because German government is supporting residential storage with a rebate of up to 3,000 euros (~ $3,200). => This is a market, Tesla will conquer in an instant, once they realize the potential. And I'm sure they will enter it with the home battery soon enough.

That's just a wag, but I think Tesla will be battery-supply constrained for the next 10 years, folks. They better start building GF #2 and #3 now.

 

[stevejust]

Hi does anyone know if Tesla talked to utilities yet? from the talk by JB I get they did, but is there any more specific information about what utilities (perhaps Hawaii?),

Also, would Tesla work directly with the utility or through a integration company?

Thanks

Yes. Jay Squyres probably already posted the photos from his trip about a month ago to Oncor's test lab in Lancaster, TX somewhere on this forum. They've already got a 400 kWh Tesla battery there they've been testing out. We have a deregulated market here in TX, so Oncor is the distributor, and we buy energy from any one of about 40 or so electric companies, ranging from TXU, Reliant and NRG, to small companies no one's ever heard of.

It's interesting that Oncor is considering spending a whole lot of money on battery backups. And we know from their test lab Tesla is already one of the batteries they're considering.

 

[vgrinshpun]

the 1.46 is bumped to 1.75 by the program giving 20% more incentive to CA based vendors. Tesla is where?

this is how a home system buyer sees $8760 incentive off of 5000W. However, will they see it? They will lease from Solar City and really not be able to buy it unless they offer a buy option. Seems like a lot, but look at prior years, it was $12,000 on a $20,000 install. Now installs are written as an eligible price of $23K and change.

What I also see is that some recent project additions are on the waitlist. When they announce home storage on Apr 30, and Solar City says "available later this summer" I have to think that Tesla may cancel some old reserved monies from 2012-2013 project reservations which have not started to open up incentives for 2015 for new customer demand. Otherwise, it becomes something to put off until more reservable CA incentive money is made available. Of course, that is CA only - they can sell home systems anywhere as long as the installation price is good and people find value in it.

Thanks, got it. It is on p.78 of the Manual, Bill AB 2267 approved back on 9/28/2008.

- - - Updated - - -

This is super, vgrinshpun. In your table, is this really in kWh, not kW? The ratio of incentive to kWh is $1517.20 by my calculation. Might this just be specific to Tesla installations?

It's interesting that the incentives taper of above 1 MW. Do we understand why this program is preferential to smaller projects?

Thanks for putting this report together.

The Summary Table includes kWh, not kW. kWh are obtained by multiplying kW by two, to account for the fact that Tesla battery kW rating is based on 2hr discharge.

While double checking my math, however, I discovered a typo in the formula used for calculation of total kWh in 2014. The correctly calculated total kWh in 2014 is 73,448, not 36,724. The updated table:

 

[vgrinshpun]

One conclusion, which I actually came to even before perusing the above data, is that oncoming battery storage announcement/reveal event is going to be enormously important and will set the tone for the ER. The battery storage information during the ER might overshadow all other information, as it will hopefully provide enough data for analysts to start taking battery storage part of the business seriously, and start putting some additive numbers reflecting this part of the business into PT.

Good Job, Deutsche Bank - you are the second to put some preliminary $$ on the stationary storage business - potentially a $100 adder to the PT is mulled! The first, of course was Andrea James of Dougherty with the estimate that stationary storage side of the business could add up to $70 to the PT.

Just to be clear, though, nobody actually changed the PT, for now there is just speculation on potential for this part of the business. I believe this will change post the April 30th announcement or the ER, when some numbers will start to show up in the Q1 financials.

Just to add some color (to borrow the analyst's favorite word), I did some additional take on the SGIP spreadsheet, which revealed that out of total of 23 projects that were completed, the SGIP payment for four projects totaling 219 kWh were made in Q4 2014, while SGIP payment for the other 19 projects, including 8 residential (total 80kWh) and 11 Commercial (660kWh Wall Mart stores?) were made in Q1 2015.

So my theory is that the timing of the April 30th event is not incidental - the Q1 2015 report might show the stationary storage revenue as a separate line item (very small), signalling a new stage in the evolution of the Company. Could be very significant - come on Tesla - time to reveal some of your cards!

 

[sundaymorning]

Good Job, Deutsche Bank - you are the second to put some preliminary $$ on the stationary storage business - potentially a $100 adder to the PT is mulled! The first, of course was Andrea James of Dougherty with the estimate that stationary storage side of the business could add up to $70 to the PT.

Just to be clear, though, nobody actually changed the PT, for now there is just speculation on potential for this part of the business. I believe this will change post the April 30th announcement or the ER, when some numbers will start to show up in the Q1 financials.

Just to add some color (to borrow the analyst's favorite word), I did some additional take on the SGIP spreadsheet, which revealed that out of total of 23 projects that were completed, the SGIP payment for four projects totaling 219 kWh were made in Q4 2014, while SGIP payment for the other 19 projects, including 8 residential (total 80kWh) and 11 Commercial (660kWh Wall Mart stores?) were made in Q1 2015.

So my theory is that the timing of the April 30th event is not incidental - the Q1 2015 report might show the stationary storage revenue as a separate line item (very small), signalling a new stage in the evolution of the Company. Could be very significant - come on Tesla - time to reveal some of your cards!

I must admit, you are peddling with some very interesting speculation. btw, I'm a fan of your work here, keep up the wonderful things that you do.

 

[vgrinshpun]

I think before calculating all these 100s of Millions, please check that the total budget for 2015 is 77 Mio ( http://www.cpuc.ca.gov/NR/rdonlyres...E-3B95FE9CAF3C/0/2015SGIPHandbookV1_Final.pdf ) Page 8, 25% of which reserved for Non-Renewable stuff like Gas Generators. So we have ca 58 Mio potential funding split between multiple parties, is that really worth all this excitement and analysis?

Or do i read it wrong?

You might be missing the fact that Tesla, as always, is being very smart in their tactic. They put a "stake" for a total of 607 projects, spread-out over 5 years, starting with 2011. For the purpose of the SGIP program the money for the incentive payment are reserved at the time when application was accepted, and count against that year. For example the following is breakdown of the total of 23 Tesla projects with incentive paid to date (in Q4 2014 and Q1 2015):

• 10 incentive payments were made against 2011 Budget,
• 9 payments - against 2012 Budget,
• 3 payments - against 2013 Budget
• 1 payment - against 2014 Budget

Most importantly, though, you might be missing the fact that major significance of this data is **not** in revealing the scope of the California incentives, but revealing some data on the Tesla stationary storage business, which indicate that this part of the business will be immensely profitable for TM, with **much** higher gross and net margins than the automotive business.

See my previous post for more details. Based on the data from the SGIP spreadsheet TM is currently selling their stationary storage product at around $1000/kWh, with the incentive of $1,752/kW. Since this incentive is for total cost of the system, including installation, the portion that goes toward the equipment could be approximately half of the total. Then, taking into account that Tesla kW rating is for a two hour discharge rate, the battery portion of the incentive payment accounts for about $438/kWh. So when Cali incentives are phased out, Tesla might need to lower the price to $1000/kWh - $438/kWh = $532/kWh. As seen from the post that I linked above, even after all of the incentives are phased out the potential profits are immense.

So the main takeaway from the SGIP data is that TM has additional very scaleable business with enormous earning potential.

 

[SBenson]

Sorry if I missed, but why would people want to buy/lease batteries which are so expensive instead of buying generators?

 

[Jonathan Hewitt]

Sorry if I missed, but why would people want to buy/lease batteries which are so expensive instead of buying generators?

Generators are only good when the power is out due to high cost of running them. Batteries can be used for much, much more.