While it isn’t walking away from the electric vehicle market, California’s Tesla Motors is expected to announce a new line of business this evening during a splashy news conference starring its media-savvy CEO Elon Musk.
Tesla reportedly will reveal it is entering the market for stationary batteries that can provide backup power for home, office and industrial applications. The anticipated announcement has been tempting analysts and investors, the maker’s stock price on a sharp rise in recent weeks. The move could help ensure the viability of the $5 billion Gigafactory battery plant Tesla is setting up in Nevada, even if its electric vehicle sales don’t meet growth expectations.
Less than coincidentally, Musk also serves as chairman of Solar City, another start-up that provides stationary battery units to back up its solar power systems.
The topic of tonight’s news conference hasn’t been a particularly close-kept secret. On March 30, Musk tweeted that the carmaker would have news of a “major new Tesla product line – not a car.”
In fact, USA Today reported that Tesla has a job posting for a development operations engineer that notes, “the suite of grid-connected battery systems developed by Tesla perform a variety of high value functions for utilities, businesses, and residential customers, and the fast-growing team is adding top team members for engineering, business, and sales.”
(Tesla CEO Musk making less than line workers – in salary, anyway. Click Here for more.)
The market for battery back-up systems has been growing rapidly, though it has traditionally been centered around lead-acid batteries. In a forecast released earlier this year, TechNavio estimated so-called SLA, or stationary lead-acid, battery sales will increase at a compound annual rate of 6.9% through 2019.
Lead-acid backup systems can handle extreme power surges, but they don’t store a lot of energy for their size and mass. So, some experts believe there’s a strong opportunity for stationary systems using more advanced lithium-ion technology – like that which Tesla will produce at its Reno, Nevada Gigafactory.
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A report issued by Morgan Stanley last year suggested an energy storage system from Tesla could be “disruptive,” especially when paired with affordable solar energy technology, even encouraging some consumers to go “off-the-grid.”
Deutsche Bank, meanwhile, has forecast stationary power could be worth $4.5 billion a year for Tesla, which has been operating in the red using traditional accounting methods.
Overall, the energy storage industry I expected to reach $19 billion annually by 2017, according to IHS CERA, though that includes a variety of different storage technologies.
The storage issue has been a major problem limiting the implementation of solar power. The problem is that homeowners typically need most of their power at night, when they’re able to get no energy from the sun. That could be overcome with an affordable backup system that would store power during peak daylight hours.
Tesla’s link to Solar City could provide a ready-made market for new stationary power units. And it could provide a backup, if you will, for production out of the Gigafactory should sales of Tesla battery vehicles not charge up the market like the company has been hoping.
But home use is just one application. Experts suggest there is need for energy storage everywhere from cellphone towers to electric utility distribution systems. Clusters of batteries could help offset demand surges during hot afternoons, and keep customers powered up in the event of a grid blackout.
In the weeks since Musk first dropped his Twitter hint, Tesla’s stock has soared, jumping from $190 a share to $232.45 at the market’s close on Wednesday. It did, however, slide on Thursday, ahead of Musk’s news conference.
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