rolosrevenge
Dr. EVS
I wonder if they'll be doing a combined optimization of regulation, reserves, and energy arbitrage with those batteries. You can make quite a bit more money if you do that than simple energy arbitrage.
You can install our site as a web app on your iOS device by utilizing the Add to Home Screen feature in Safari. Please see this thread for more details on this.
Note: This feature may not be available in some browsers.
Wasnt there a pic on the solarcity site showing a tesla battery box attached?
C.O.
I think that Randy's article was a good jumping off place.
Superchargers are free to Tesla and to drivers for several important reasons:
1. Solar power fed into the grid for $0.30/kWh
2. Battery grid buffer. Tesla is selling their ability to back the grid during peak use so that the grid doesn't have to buy "peaker" power $0.15/kWh available
3. Time of Use. Tesla can "sell" power all day via solar and battery, and can charge back in the evening and "buy" for $0.05/kWh
Will all of the above generating revenue for Solar City, the Superchargers are going to be break-even OR make money for Tesla.
The value of the battery grid buffer will likely increase since peaker power is so expensive.
Grid storage is actually an excellent use for battery packs at the end of their automotive life. A 25% reduction in capacity will probably be enough to get a Model S owner to buy a new pack. Tesla gets to use the 75% remaining capacity of the old pack for grid storage. This residual value of old packs might also explain why Tesla has offered replacement battery packs for $12,000.
C.O.
I think that Randy's article was a good jumping off place.
The value of the battery grid buffer will likely increase since peaker power is so expensive.[/FONT][/COLOR]
Tesla just updated teslamotors.com to now have the SuperCharger first and formestly featured. (I think this happened within the last 2 hours). Model S is now in the background.
I think you're right on the new core business.
Wow. My GM-like investment just became an XOM-like investment.
I wonder if they'll be doing a combined optimization of regulation, reserves, and energy arbitrage with those batteries. You can make quite a bit more money if you do that than simple energy arbitrage.
The immediate thought I had when I first read this idea about grid level storage as a business - clearly the car battery packs, at 85kw each, are getting ganged together in astounding numbers to eventually have enough extra packs to actually do this. I don't know where the cost would need to be to make this work, but it seems to me that the cost for the packs would need to be a lot lower than we've been thinking its actually at right now, to make that feasible.
At the level of a single pack, if this electricity arbitrage is worth $0.10 per kwh (say buy at $0.05, sell at $0.15), and if you move 50 kWh/day, then the pack is earning $5/day. That's around $1800/year. If the pack costs $400/kWh to manufacture (I've seen that number somewhere before), then you're into the $32k range. You need closer to 20 years to break even and that doesn't seem all that good. But if the packs cost more like $100/kWh to manufacture, then you're down to about 5 years to pay for the pack - that sounds really desirable.
I really don't know what to make of this, but if Tesla has figured out how to do production levels of grid level storage and make it pay, they can build the grid storage company themselves, or they can sell the packs to others to implement grid storage; either way, they're going to need a bigger battery pack manufacturing plant.
You make an interesting case, CO. How do we know that it would be Tesla profitting from this and not Solar City? I'm long TSLA, but no SCTY, maybe this will be my impetus to "diversify".
Let me throw out another mind blowing scenario. We know by factory tour stories that Tesla has been building far more battery packs than cars. It has been assumed that they were going to be sold to Toyota or Daimler for EVs or maybe the battery swapping idea proposed.
What if Tesla has been storing up a surplus of these things while the grid idea has been under R&D?
We know that Solar City got a big loan from Goldman Sachs. Wouldn't it be like Elon to have a big sale of packs right before 2nd quarter end? Maybe just enough to show a profit for the second quarter in a row? Sell more in the 3rd quarter and maybe he hits 4 straight quaters of profitablity? Isn't that one of his CEO requirements for stock options?
Remember that Tesla has been providing battery packs for SolarCity home energy storage systems: http://www.solarcity.com/residential/energy-storage.aspx
Capacity for these should be around 50kWh (2kW continuous load for 24h)
No idea on the production volume, though.
Solar City will be on the other side of the renewable "tango". CES is a significant fraction of the future energy market, but power generation is always a much larger fraction. Fundamentally, Solar City can't grow really large without really large CES resources, and really large CES resources are only needed in order to do load leveling for a massive renewable infrastructure.
So Tesla's CES business can only grow REALLY large (beyond its pure automotive uses, which means the capacity will exist regardless) if solar and wind prices continue to fall until they beat out conventional sources.
What a great post CO ... It is exciting you think this could be a bigger business than selling cars for them .... can't wait to see some of your numbers on this .
After reading this thread I think "the way for the Tesla Model S to be recharged throughout the country faster than you could fill a gas tank" is through grid tied batteries at the supercharger stations.
What if Tesla has found that their packs are capable of safely charging and discharging at 6C (10 mins). This normally would require a massive substation feed from the utility. Not going to happen at the hole-in-the-wall locations of the Supercharger stations. But if they've got battery packs at the stations this won't be a problem as the battery will be the high current buffer. "Trickle" charge the station batteries from the grid at night and solar during the day. Then dump a massive charge into a car when it pulls up. If too many cars happen to stop by and deplete the batteries, no worries - just fall back to 120kW fed from the grid.
Yes, I've figured for awhile that swap stations would do rate arbitrage and help reduce demand charges, but I wasn't thinking through the scale of the potential income from that until after I read Randy's piece. For that matter, Randy didn't write it up right. Elon is going for the jugular with this grid power gambit.
If you scale the grid storage capacity required to support 100 million automobiles (whether for swapping, or charging) you get hundreds of gigawatts of power storage. You are in the range of what is required to load balance a muti-terawatt national energy grid that is solely renewable sources, like solar/wind/hydro.
So Tesla is trying to simultaneously take over the auto industry, and a substantial portion of the energy industry (with grid storage), while enabling the near total destruction of fossil fuel interests (barring non-energy uses anyways) by players like Solar City (whose distributed utility model is also designed to put traditional utilities out of business). And technically speaking, the quantity of grid storage available on the cars themselves would allow only Tesla and Solar City to power the country (so screw those other renewable guys). The scope of the vision is just breathtaking. And Tesla is just going to do this as a byproduct of its "core" business.
Anyways, back to Randy's piece, when I read it, it seemed he was using a model based on the regulations where home solar users are able to sell power back to the grid at the prevailing rate.
But I know for a fact that peaker power is dramatically more expensive than the prevailing rate, and grid storage at sufficient scale can do the job of peaker plants, better. This is a high quality, on demand energy source that can be accessed at digital speeds. Seems like you should be able to get peakerish rates, which (if I recall correctly) are tens or hundreds of times the market price.
So I think the whole rate-arbitrage model needs some serious work. These grid storage devices shouldn't be operating under the same pricing conditions that were imposed on home solar users (who were kind of powerless in the regulatory wrangling that set up the system they operate under). Peaker rates are much more likely, and when it scales enough the rates should be more comparable to the large backup gas generators that take longer than peakers to get online (so less money than peakers, but more than prevailing market).
- - - Updated - - -
Tesla offered battery replacement packs for $12,000 because they will make a big profit on that regardless of their future plans.
You can't lift a 1500 A cable by hand, and a 2500 V source will arc over everything.
You make an interesting case, CO. How do we know that it would be Tesla profitting from this and not Solar City? I'm long TSLA, but no SCTY, maybe this will be my impetus to "diversify".