The Stationary Battery Business

[neroden]

I realized this didn't have an investment thread.

I believe that J B Straubel is right and that this will be a bigger business for Tesla than the automotive business. For one thing, Tesla's notorious communications issues are a much bigger problem in the auto business than in the "install and forget" stationary storage business -- both at retail scale and even more at utility scale.

For another thing, both individuals and utilities are going to be *clamoring* to get batteries. Here's the latest news of the Big Battery in South Australia:

Tesla big battery outsmarts lumbering coal units after Loy Yang trips

 

[Paracelsus]

I realized this didn't have an investment thread.

I believe that J B Straubel is right and that this will be a bigger business for Tesla than the automotive business. For one thing, Tesla's notorious communications issues are a much bigger problem in the auto business than in the "install and forget" stationary storage business -- both at retail scale and even more at utility scale.

For another thing, both individuals and utilities are going to be *clamoring* to get batteries. Here's the latest news of the Big Battery in South Australia:

Tesla big battery outsmarts lumbering coal units after Loy Yang trips

This could prove to be one of the most important concepts of battery storage for grid reliability and security. Great article, neroden. Thanks for posting and thanks for starting this thread!

 

[TheTalkingMule]

From a TSLA investment perspective, my major concern is the application of a mobile storage solutions in the stationary market. There's no need for lightweight(expensive) battery tech to dominate grid or even residential storage. If a 20kWk Powerwall type solution weighs twice as much, but is 25% cheaper, people are going to use that heavier tech. There's no need to pay a lot more to save 4 square feet of space in your basement.

Especially in grid level applications. I mean, there's gotta be a million and one cheaper and longer-lasting storage solutions using today's tech. Tesla's early traction with relatively expensive tech is just an indication of their far superior execution. That won't last long in the grid market. Long term I see residential Powerwalls being ubiquitous and grid solutions being something else entirely.

And yes, I firmly believe that the solar/storage/services business will be far more profitable than automobiles for Tesla. I think everyone's gonna have Buffalo panels and a Sparks Powerwall "soon". Why wouldn't they?

 

[dc_h]

With the big battery coming online and power packs and smaller projects, it seems that TE should be a 500 million dollar business this quarter. I’m curious about Puerto Rico and who’s paying for the work there. It’s a tragic situation, but I hope the federal government or charities are funding the Tesla solar and battery projects.
I’ve seen other companies picking up contracts, but not a lot of visible work for Tesla.

Thanks for setting up the thread.

 

[LakeForest]

500 million!!!? Energy Storage was a 300 million a year business for the WHOLE INDUSTRY in 2016. Not a chance Tesla pulls that off this quarter(unless you are including a lot of solar--not that privy to how much Tesla has historically done there.)

South Australia battery was likely in the $50-100 million range...A good rule of thumb today is $250/kWh of battery and $250/kW of power output.

 

[ItsNotAboutTheMoney]

From a TSLA investment perspective, my major concern is the application of a mobile storage solutions in the stationary market. There's no need for lightweight(expensive) battery tech to dominate grid or even residential storage. If a 20kWk Powerwall type solution weighs twice as much, but is 25% cheaper, people are going to use that heavier tech. There's no need to pay a lot more to save 4 square feet of space in your basement.

Depends on the location. Central Boston, 4 ft^2 is $2700. Metro $1072.

Especially in grid level applications. I mean, there's gotta be a million and one cheaper and longer-lasting storage solutions using today's tech. Tesla's early traction with relatively expensive tech is just an indication of their far superior execution. That won't last long in the grid market. Long term I see residential Powerwalls being ubiquitous and grid solutions being something else entirely.

And yes, I firmly believe that the solar/storage/services business will be far more profitable than automobiles for Tesla. I think everyone's gonna have Buffalo panels and a Sparks Powerwall "soon". Why wouldn't they?

I can't believe that utilities would simply let Powerwall dominate. They make money by persuading PUCs to let them spend on infrastructure. If Powerwall gets to the point where it can have a large market then utilities would try to pull the rug using localized grid storage (or lobbying).

 

[ggr]

500 million!!!? Energy Storage was a 300 million a year business for the WHOLE INDUSTRY in 2016. Not a chance Tesla pulls that off this quarter(unless you are including a lot of solar--not that privy to how much Tesla has historically done there.)

South Australia battery was likely in the $50-100 million range...A good rule of thumb today is $250/kWh of battery and $250/kW of power output.

As I pointed out last week, Tesla Energy was already about $330M last quarter. It's in the 10Q, easy to look up.

 

[EinSV]

Another interesting piece published today by the folks at reneweconomy.com.au.

An Australian solar industry player see a very rapid increase in utility storage next year (predicting almost 800 MWh of installs/projects), but what caught my eye was his prediction that by the end of 2018/2019 the economics will be such that for distributed solar "no one will install solar without a battery":

"At the distributed level, Wills is confident that the payback for solar and batteries combined will mean new installs will start to outstrip solar-only installations over the course of 2018 – and into 2019 no-one will install solar without a battery."
​

2018: When battery storage gets a grip on the grid

Given the very high electricity costs in Australia and falling costs of storage this seems plausible although I am sure there will always be some exceptions.

I wonder if there is any roadblock other than production capacity to storage alongside residential and commercial solar becoming the norm and mushrooming in the next 2-3 years in other places with decent solar resources and high electricity costs? Much of Europe, for example.

 

[Dennisj00]

Instead of embracing rooftop solar the major utility here is resisting and I’m sure they’ll study battery storage for a few years. In. The meantime they’re adding gas peaking and canceling unc plants.

I’m hoping the AU project will short circuit some of the timeframes (no pun intended)!!

 

[MitchJi]

Especially in grid level applications. I mean, there's gotta be a million and one cheaper and longer-lasting storage solutions using today's tech. Tesla's early traction with relatively expensive tech is just an indication of their far superior execution. That won't last long in the grid market. Long term I see residential Powerwalls being ubiquitous and grid solutions being something else entirely.

Name one!

Another interesting piece published today by the folks at reneweconomy.com.au.

An Australian solar industry player see a very rapid increase in utility storage next year (predicting almost 800 MWh of installs/projects), but what caught my eye was his prediction that by the end of 2018/2019 the economics will be such that for distributed solar "no one will install solar without a battery":

"At the distributed level, Wills is confident that the payback for solar and batteries combined will mean new installs will start to outstrip solar-only installations over the course of 2018 – and into 2019 no-one will install solar without a battery."​

2018: When battery storage gets a grip on the grid

Given the very high electricity costs in Australia and falling costs of storage this seems plausible although I am sure there will always be some exceptions.

I wonder if there is any roadblock other than production capacity to storage alongside residential and commercial solar becoming the norm and mushrooming in the next 2-3 years in other places with decent solar resources and high electricity costs? Much of Europe, for example.

Exceptions will be rare. Pretty soon this will be the cheapest solution almost everywhere.

Nobody is factoring in the battery cost reductions as Tesla finishes scaling Gigafactory 1. These are clearly implied by the semi prices.

 

[TheTalkingMule]

Name one!

Certainly these giant flow batteries appear to be inherently cheaper as there's less to manufacture and they last longer. I've also been a fan of the aqueous hybrid batteries that look like an easier product to manufacture as well.

Would love to see Tesla stretch their grid and home battery game beyond lithium ion. Clearly execution of vision is their strength, nothing wrong with expanding the product line.

 

[MitchJi]

Certainly these giant flow batteries appear to be inherently cheaper as there's less to manufacture and they last longer. I've also been a fan of the aqueous hybrid batteries that look like an easier product to manufacture as well.

Would love to see Tesla stretch their grid and home battery game beyond lithium ion. Clearly execution of vision is their strength, nothing wrong with expanding the product line.

So far execution of their vision has been a weakness. They have had off the hook orders for years now. It’s so bad that the market has shortsightedly entirely written TE off, which is most of the reason for this thread.

Appear to be cheaper. Why didn’t they win the contract?

And remember that will they need to be cheaper than Tesla in about 2020 when Tesla’s costs will fall by about 25-35%.

As for the more distant future I believe that they are working with the Goodenaugh battery technology which will reduce their costs by at least an additional fifty percent.

 

[TheTalkingMule]

These guys are launching and recycling rockets, switched the global vehicle market to EV, saved the entire US residential solar market, and manufacture hats. That's pretty decent execution.

Sometimes the investor forum can be aggrivating.

 

[dc_h]

Appear to be cheaper. Why didn’t they win the contract?

It does seem that they are having production or sales problems. Based on the Samsung batteries for AU, production seems likely. Further with issues getting the NY solar plant going it seems like Panasonic is having issues getting things done in the US. Not sure if cultural or not enough people or the right people. Would like to hear more about Elon bileing in Sparks and NY more often.

 

[EinSV]

Exceptions will be rare. Pretty soon this will be the cheapest solution almost everywhere.

Nobody is factoring in the battery cost reductions as Tesla finishes scaling Gigafactory 1. These are clearly implied by the semi prices.

I agree with that, although human nature being what it is, it seems likely that change will happen fastest where the advantages are most compelling. Initially we have seen it on islands with very high electricity costs. Next up may be a very large island -- Australia -- with 25M people, abundant sun, and very high electricity costs. Australia also has moderately high gasoline prices (between U.S. and Europe) so there could be a nice virtuous cycle with residential solar installs spurring purchases of EVs ....

Europe's high electricity and gasoline/diesel prices and also seem to make it ripe for disruption.

Also, obviously places like California with high electricity costs, lots of sun and favorable policy/political climate.

 

[TheTalkingMule]

California throws away something like 300GWh each year due to wind and solar variability. That energy is just sitting there ready to be absorbed and stored for use on a muggy Thursday afternoon.

 

[SBenson]

Information straight from the 10Q's. @schonelucht helped me find the SolarCity numbers. Will post screenshots for reference.

 

[EinSV]

View attachment 267911

Information straight from the 10Q's. @schonelucht helped me find the SolarCity numbers. Will post screenshots for reference.

Did we ever figure out if Solar City numbers included any storage (for example for combined solar/storage installs)? IIRC the storage numbers were not separately listed but the numbers above were derived by subtracting solar city from total energy?

 

[scaesare]

Certainly these giant flow batteries appear to be inherently cheaper as there's less to manufacture and they last longer. I've also been a fan of the aqueous hybrid batteries that look like an easier product to manufacture as well.

The flow batteries generally are used with electrolyte replacement schemes, which would also then mean a more complicated installation, greater likelihood of industrial accident, different operational cost, etc...

I'd not conclude that, all things taken in to consideration, that such alternatives are necessarily superior on all axes: $/KWh, TCO, system complexty, etc....

Would love to see Tesla stretch their grid and home battery game beyond lithium ion. Clearly execution of vision is their strength, nothing wrong with expanding the product line.

Tesla has already demonstrated they aren't wedded to any one specific technology implementation. They've adopted different chemistry optimized for stationary storage. They switched to different form factors to improve design. They switched from AC induction motors to permanent magnet AC motors where it made sense.

Elon has run SpaceX in a similar manner: when plans/systems no longer mades sense or were the best option, they dropped them and moved on.

I wouldn't decide that not "moving beyond lithium ion" doesn't mean that Tesla isn't innovating... but rather I'd assume that optimizing those chemistries still provides the best solution for the system characteristics they desire.

 

[SBenson]

Did we ever figure out if Solar City numbers included any storage (for example for combined solar/storage installs)? IIRC the storage numbers were not separately listed but the numbers above were derived by subtracting solar city from total energy?

Yes, you are right, SolarCity may include some storage numbers. But knowing SolarCity's past numbers and trends, I don't expect a lot of storage baked into it. I would say less than 5 to 10%.
For reference SCTY Q4 2016 revenue was 222mln. It was expected to book 250mln and 285mln for Q2 and Q3 2017.
The only real market for SCTY that would make sense with storage was Hawaii.
For CA it is more of a hobbyist thing than anything else. Given the abundant net-metering.