Elon Musk and Tesla Energy recently introduced a new home battery system.
It is, in theory, pretty revolutionary.
It stores solar power such that a home can run on solar power all the time, even when it is cloudy or dark outside.
But in practice it’s still in the early stages, it’s really expensive (around $US9,000 all-in), and there likely won’t be enough economic incentive to make it really worth using for the vast majority of people.
From CNBC’s story on the announcement:
In places like California, where there are generous incentives for installing renewable power, a homeowner could save about $US2 a day, meaning the system pays for itself in four to six years, said Mark Duvall, director of energy utilization at the Electric Power Research Institute, who’s based in the northern California town of Half Moon Bay. In most of the rest of the country, the payoff would be longer because government incentives to go solar are smaller.
Initial demand is huge, but analyst reactions have been mixed.
Credit Suisse’s auto research team noted that reservations for stationary energy storage went “bananas out of the gate,” but didn’t say much about a long term view.
Deutsche Bank’s auto research team is bullish:
Investors should come away from TSLA’s call with increased confidence in the prospects for Tesla Energy. Interestingly, Tesla indicated they have been overwhelmed with ~38,000 residential reservations and ~2,500 commercial reservations for Tesla Stationary Storage Systems in just the first week since Tesla Energy was announced.
However, DB also pointed out that, “though residential storage is already economically attractive in certain locations (i.e. Australia, Germany, Hawaii), the company acknowledged that most of the initial residential demand will come from customers seeking environmental benefits and/or grid independence.”
This may change, however, as utility companies respond to lower demand and the cost of batteries starts to decline.
Bank of America Merrill Lynch’s auto analysts aren’t so positive, saying, “we believe the market for stationary storage will remain small over the foreseeable future, with intense competition resulting in a low margin profile for most players, including Tesla.”
But what about the longer term implications?
John Aziz took that on this week on his blog. He thinks this is a huge, world-changing new technology. But it is in very early stages, and it’s too soon to tell where the market is going to go:
This, in my view, is the furnace to power the next fifty or a hundred years of soaring mid-20th century style economic growth. This is the beginning of an energy-driven economic supercycle — which takes us from the era of handheld computing to the era of building asteroid mining space stations and extraterrestrial colonies and maybe even interstellar spacecraft. It’s the main reason why I switched from bearish to bullish in 2013.
But what I really want to know is how to make money out of this trend. If photovoltaic cells and batteries are the new crude oil, coal, gasoline and natural gas (etc), does that mean Musk’s firms (Tesla, SolarCity, SpaceX, etc) are going to be the next Exxon-Mobil or Shell or Gazprom?
Maybe. But I’d tend to see renewable energy and emerging tech index funds as a slightly smarter bet. The trouble is that we’re at a very early stage in the supercycle.
Regardless, there’s a lot of opportunity here. For someone.