Larry, I don't know as much about this stuff as you, but I assumed what we're talking about is a scaled up version of this:
Home Energy Storage & Battery Backup System - SolarCity
Is that fair? Would that mean Tesla/Solar City is already in this business?
Also, when we say grid storage, the battery is not feeding power into the grid, just into the Superchargers right? If so, why is it such an issue to the utility?
Hi Jason,
Thanks for the link. Let me say up front that I'm by no means an expert on this subject. Maybe the small scale work that Tesla has done with Solar City might convince utility engineers to take a chance and connect a .5 MWh device to their grid, but my impression is that they would prefer an established company with a track record. Utility engineers are very protective of their grid and don't like unknows. I don't think the power is always only feeding the Superchargers it may also feed the grid. In which case the utility engineers would want to be assured that Tesla's inverters are up to snuff.
In the long haul its unlikely that Tesla is merely looking to just feed back kWh to the grid to net out these energy costs. When we are talking about storage that can handle .5-1.0 MWh installations with dozens spread across a service territory, I think we are dealing with a much bigger business opportunity. No doubt CapitalistOppressor can do a better job of explaining the business case than I can, but let me throw a few things out.
Large battery storage systems are attractive to utilities and they may pay for storage services.
Utility grids have frequency control requirements that set limits at which the utility must carry out some action. A grid storage device can instantaneously supplement the power system buying time for the utility while total generation is increased by bringing generators on-line. The alternative is to build more reserve generation capacity which is very expensive.
Grid storage can enhance the value of energy from renewable generation. Photovoltaic (PV) and wind energy is intrinsically variable. These renewable generation sources can charge a battery which can later be discharged during those periods when PV or wind is not available. So grid storage make renewable sources more feasible, i.e. more valuable.
Grid storage is basically distributed generation. That is the generation source is located closer to the load than conventional generation. Therefore, if generation is available closer to the local load then Transmission and Distribution costs can be deferred. Deferred T&D construction can be big bucks.
Similar to the above, a utility can defer the upgrade a substation by having a grid system located at the proper location.
The use of electricity storage can reduce overall air emissions for fossil fuel plants. This permits the increase in the use of renewables and can provide an environmental credit.
Of course from Tesla's perspective, storage permits them to reduce demand charges.
I don't know how much a particular utility would pay Tesla for grid storage services, but clearly it is a win-win situation for the utility to work with Tesla especially when Tesla is funding the installation of substantial distributed generation throughout the utility's service territory. So who knows in the long haul this could be a major revenue source for Tesla.
Food for thought.
Larry