tag:theconversation.com,2011:/id/topics/tesla-energy-16590/articles
Tesla Energy – The Conversation
2021-01-27T22:55:58Z
tag:theconversation.com,2011:article/153793
2021-01-27T22:55:58Z
2021-01-27T22:55:58Z
Is Tesla’s share price justified? Probably not
<figure><img src="https://images.theconversation.com/files/380783/original/file-20210127-21-q0omku.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5000%2C3218&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Elon Musk is now the <a href="https://www.bbc.com/news/technology-55578403">world’s richest person</a>, edging out previous title holder Amazon’s Jeff Bezos. His rocketing fortune is due to the booming share price of <a href="https://www.tesla.com/">Tesla</a>, the maker of electric vehicles and clean energy technologies.</p>
<p>In the past week Tesla’s share price surpassed US$880, ten times its March 2020 low of US$85, giving the company a market capitalisation (or total value) in excess of US$880 billion – <a href="https://www.visualcapitalist.com/worlds-top-car-manufacturer-by-market-cap/">more than</a> Toyota, Volkswagen, Daimler, General Motors, BMW, Honda, Hyundai and Ford combined.</p>
<p>That’s an extraordinary amount for a company that only last financial year made its first full-year profit since being founded in 2003; and that profit was relatively modest. It gave Tesla a price-to-earnings ratio – a standard measure of a stock’s value – <a href="https://finance.yahoo.com/quote/TSLA/news?ltr=1">close to 1,700</a>. </p>
<p>Compare that to the other shares that have boomed since global stock markets rebounded from the COVID-induced lows of March 2020 – technology companies such as Facebook, Apple, Amazon, Microsoft and Google. Amazon’s PE ratio is about 97, Apple’s about 44, and others in the 30-40 range.</p>
<p>Telsa’s latest quarterly profit is equally modest, <a href="https://www.cnbc.com/2021/01/27/tesla-tsla-earnings-q4-2020.html">missing analysts’ expectations</a> with reported earnings per share of just 80 cents. Its share price has dipped as a result, but still remains a very optimistic valuation. </p>
<p>So can Tesla’s valuation be justified, or is this one more example of a bubble waiting to burst? Well, Tesla is clearly an extraordinary innovator, but there are several reasons to think that, though irrational exuberance may drive its value even higher, sooner or later it’s going to come crashing back down to earth.</p>
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Read more:
<a href="https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413">Tulip mania: the classic story of a Dutch financial bubble is mostly wrong</a>
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<h2>The positives</h2>
<p>Tesla has benefited from its founder’s vision. It has established a strong brand as the premiere producer of electric vehicles and renewable energy systems – two industries on the cusp of significant growth as the world moves away from fossil fuels. </p>
<p>It has successfully developed a suite of electric cars where other car companies have failed. It has done this by capturing the imagination of investors and technology enthusiasts alike with technically impressive and aesthetically beautiful products. </p>
<p>It has become a major manufacturer of solar photovoltaic systems.</p>
<p>Connected to both these markets are its developments in batteries to power vehicles, homes and entire communities. In South Australia it built the world’s largest lithium-ion battery, storing renewable energy from nearby wind turbines when generation exceeds demand and balancing out the grid when demand exceeds variable supply.</p>
<p>These industries will accrue a greater share of vehicle and energy markets over time, and Tesla will be a major player in both.</p>
<p>However, Tesla faces serious challenges. </p>
<h2>Tesla has led, but others will follow</h2>
<p>The <a href="https://www.vw.com/en/electric-vehicles.html">major car makers</a>, once wedded to their old internal combustion technologies, are embracing electric in response to what is, for them, an <a href="https://www.reuters.com/article/us-climate-change-eu-transport/eu-to-target-30-million-electric-cars-by-2030-draft-idUSKBN28E2KM">existential threat</a>. Car makers from Korea to Japan to Germany – and of course <a href="https://www.nio.com/">China</a> – are responding with new products to challenge Tesla’s position.</p>
<p>In strategic management, this response is called “disruption”. </p>
<p>The term is most closely associated with the American academic Clayton Christensen. In his influential 1997 book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, he describes the inexorable processes of how “early movers” are confronted with a new batch of entrants intent on securing their share of growing markets.</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/qDrMAzCHFUU?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Clayton Christensen discusses the innovator’s dilemma.</span></figcaption>
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<p>Tesla’s success is tantalising, something both established and start-up competitors will seek to emulate. Late movers may start with simpler, cheaper and by some measures inferior products. But over time they can learn what consumers want and are willing to pay for. They then challenge industry leaders for a share of the market, starting at the bottom but always moving upward.</p>
<p>Indeed, Tesla itself has benefited from these very processes.</p>
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Read more:
<a href="https://theconversation.com/pursuing-teslas-electric-cars-wont-rev-up-vws-share-price-152279">Pursuing Tesla's electric cars won't rev up VW's share price</a>
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<h2>Smoothing the road for competitors</h2>
<p>As an early mover, Tesla is also laying the foundations for emulators’ success. By establishing the impetus for infrastructure needed for the massive roll-out of electric vehicles, later movers will face fewer entry obstacles than Tesla and other early movers. </p>
<p>These include creating charging stations that, once established, will drive a virtuous cycle of increased demand for electric vehicles and supply of stations.</p>
<p>But the differences between Tesla and its big-tech peers may be a source of serious challenge.</p>
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Read more:
<a href="https://theconversation.com/how-superfast-charging-batteries-can-help-sell-the-transition-to-electric-vehicles-153872">How superfast charging batteries can help sell the transition to electric vehicles</a>
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<p>Other tech companies benefit from what economists call <a href="https://online.hbs.edu/blog/post/what-are-network-effects">network effects</a>: the more ubiquitous a product, the more valuable it become to users.</p>
<p>Social media platforms are an obvious example, but it also applies to companies such as eBay and Amazon: the more buyers and sellers on these platform, the greater their value to sellers and buyers – and therefore the greater the returns to the service provider. </p>
<p>For Tesla, network benefits are harder to protect. More electric vehicles will create more demand for charging stations, and more charging stations will help vehicles sales. But it will be harder for Tesla to protect its stations from benefiting competitors.</p>
<p>Perhaps for Tesla’s visionary founder that’s just fine. His plans extend far beyond making money – and Earth.</p>
<p>But if you’re an investor, it’s something to be careful about. You might be able to ride the speculative rocket, so long as you time when you hop off. But if you’re looking at Tesla as a long-term investment – as you should – there are no guarantees.</p><img src="https://counter.theconversation.com/content/153793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Tesla is now valued at more than Toyota, Volkswagen, Daimler, General Motors, BMW, Honda, Hyundai and Ford combined. But don’t expect that to last.
John Rice, Professor, College of Business, Zayed University
Nigel Martin, Lecturer, College of Business and Economics, Australian National University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/64101
2016-08-26T18:27:54Z
2016-08-26T18:27:54Z
Will a merged Tesla-SolarCity put a solar-powered battery in every home?
<figure><img src="https://images.theconversation.com/files/135560/original/image-20160825-6630-3crnxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The linchpin to Tesla's proposed merger with SolarCity is the Gigafactory and whether it can lower costs and improve battery performance.</span> <span class="attribution"><span class="source">Tesla Motors</span></span></figcaption></figure><p>One year ago Tesla Motors announced plans to build its <a href="https://www.tesla.com/gigafactory">Gigafactory</a> to produce huge numbers of batteries, giving life to the old saying, “if you want something done right, do it yourself.” </p>
<p>By making electric car batteries that Tesla used to buy from others, CEO Elon Musk <a href="http://time.com/4005107/elon-musk-tesla-henry-ford/">adopted a strategy made famous by Henry Ford</a> – build a vertically integrated company that controls the many stages of production. By integrating “backward” into its supply chain, Musk is betting Tesla can improve the performance and lower the costs of batteries for its vehicles. </p>
<p>Now, Musk wants <a href="https://www.tesla.com/blog/tesla-makes-offer-to-acquire-solarcity">Tesla to acquire SolarCity</a> for similar reasons, but with a slightly different twist. </p>
<p>SolarCity is one of the largest installers of solar photovoltaic panels, with some 300,000 residential, commercial and industrial <a href="http://www.greentechmedia.com/articles/read/if-tesla-acquires-solarcity-success-will-depend-on-storage">customers in 27 states</a>. The proposed merger with SolarCity would vertically integrate Tesla forward, as opposed to backward, into the supply chain. That is, when people come to Tesla stores to buy a vehicle, they will be able to arrange installation of solar panels – and potentially home batteries – at the same time. </p>
<p>This latest move would bring Tesla one step closer to being the fully integrated provider of sustainable energy solutions for the masses that <a href="https://www.tesla.com/blog/master-plan-part-deux">Elon Musk envisions</a>. But does it make business sense? </p>
<p>The real issue in my mind comes down to batteries and innovation. </p>
<h2>Creating demand and scale</h2>
<p>Although installing batteries is not a big part of SolarCity’s current business, the company is a potentially large consumer of Tesla’s batteries from the Gigafactory. Tesla makes <a href="https://theconversation.com/has-tesla-cracked-the-grid-energy-storage-problem-41131">Powerwall batteries for homes and larger Powerpack systems</a> for commercial and industrial customers. </p>
<p>Any increase in the flow of batteries through the factory gives Tesla better economies of scale and potential for innovation. Innovation comes with the accumulated experience gained from building a key component of its electric vehicles as well as Tesla’s energy storage systems. As the company manufactures more batteries, it will find ways to innovate around battery design and production.</p>
<p>Because batteries are the single most important component to driving range between recharges and the cost of cars, the synergy between battery and electric vehicle production is obvious. </p>
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<p>Similar synergy could be argued between SolarCity and the Powerwall stationary battery business. SolarCity’s integration into Tesla would likely give a combined company more opportunities to pair Powerwall systems with solar panel installations in the near term. And more demand for batteries pulled by SolarCity’s marketing to solar customers should make the Gigafactory more profitable once it is up and running. </p>
<p>Some analysts <a href="http://www.nytimes.com/2016/08/05/business/everyone-despises-solarcity-deal-except-tesla-shareholders.html">claim</a> the proposed merger is a bailout of SolarCity, where Musk sits on the board along with several friends and relatives. </p>
<p>But all of these issues of scale and cost are relevant reasons to argue for the merger in the near term. The most important question, though, could be further down the road at the Gigafactory in Nevada. </p>
<h2>Manufacturing feeds innovation</h2>
<p>Even as Tesla makes another move to increase accumulated demand for batteries, it will also be ramping up the pace by which it accumulates opportunities for innovation in the design of those batteries. Greater demand means greater production scale and scale leads to innovation and cost reductions. </p>
<p>Better battery design and lower cost make products like electric vehicles and, potentially, solar photovoltaic installations more economically feasible to a broader market. This approach worked for Ford more than 100 years ago. There is no reason to think it won’t work for Musk today.</p>
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<a href="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=279&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=279&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=279&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=351&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=351&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=351&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Lithium ion batteries made at the Gigafactory will go into Tesla’s vehicles, including the Model S and forthcoming Model 3, as well as Powerwall home batteries (on left).</span>
<span class="attribution"><span class="source">Tesla Motors</span></span>
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<p>Historically we have seen this in <a href="http://www.businessdictionary.com/definition/learning-curve.html">many industries</a>. Examples include Ford and the Model T 100 years ago, Texas Instruments and others making hand-held calculators in the 1970s, as well as personal computers since the 1980s. </p>
<p>Maybe the best example would be home video recorders. When home recorders were first introduced in the 1970s, Sony sold them for <a href="http://www.wipo.int/wipo_magazine/en/2006/06/article_0003.html">US$1,300, which would be about $4,600 in today’s dollars</a>. As the demand for home recording increased, and an industry standard emerged to consolidate demand on one format, scale accumulated and both design and cost innovations resulted in vastly improved functionality at prices well below $100 by the early 2000s. </p>
<p>This was all made moot by the introduction of the DVD, which made the VCR obsolete. DVD players later took the same cost reduction trajectory. While there is no guarantee the results will be the same with battery design and cost, increased scale is the key to exercising that potential.</p>
<h2>Will consumers buy it?</h2>
<p>Another catalyst in this situation will be the increasing availability of “time of use” rates for grid-sourced electricity. For years, utilities have instituted rate plans that charge more for usage during peak hours (typically midday) versus steeply discounted nonpeak (nighttime) rates. This allows consumers the option to <a href="https://www.jstor.org/stable/41322373?seq=1#page_scan_tab_contents">shift demand to nonpeak hours or simply reduce peak consumption</a> to lower their electricity bills.</p>
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<a href="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=358&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=358&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=358&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=450&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=450&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=450&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Tesla’s Powerpack is aimed at commercial customers, who pay typically pay higher power costs during peak hours and could be willing to pay for some backup energy.</span>
<span class="attribution"><span class="source">Tesla Motors</span></span>
</figcaption>
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<p>With <a href="https://www.hks.harvard.edu/fs/whogan/Hogan_TOU_RTP_Newark_082314.pdf">time-of-use plans</a>, Powerwall batteries can be used as a means to store grid power drawn during off-peak periods and use it to supplement peak-time consumption. For example, a Powerwall system capable of <a href="http://www.forbes.com/sites/christopherhelman/2015/05/11/ok-so-maybe-teslas-powerwall-isnt-only-for-rich-green-people/#2eec37559aed">storing 10 kilowatt-hours (kWh) of electricity costs about US$3,500</a>. </p>
<p>By my calculations, using $0.25 per kWh off-peak rates to charge a battery and then using it to <a href="https://support.greenconvergence.com/customer/portal/articles/2238983-what-is-the-time-of-use-rate-plan-">supplement $0.34 kWh peak rates</a> would save 3,650 kWh of peak demand rates. That translates into saving $324 per year or a 9 percent return on investment on the system. Powerwall batteries can also be used as back-up in case of disruptions to the power grid.</p>
<p>But pairing a Powerwall with a solar panel installation could be where the biggest advantages can be found. The typical U.S. household uses about <a href="https://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3">1,000 kWh per month</a>. A homeowner can have a five kilowatt solar system installed for about <a href="https://www.solarpowerauthority.com/how-much-does-it-cost-to-install-solar-on-an-average-us-house/">$10,000 (after tax credits) and depending on the climate, generate most of their monthly grid needs</a>.</p>
<p>With many climates in the U.S. getting between <a href="https://www.solarpowerauthority.com/how-much-does-it-cost-to-install-solar-on-an-average-us-house/">four to seven hours</a> of sun per day, a five kilowatt solar system could generate as much as 1,000 kWh per month. By adding a 10 kWh Powerwall, the user can store excess solar generated power or nonpeak grid-sourced power and use it when most advantageous. </p>
<p>Starting the peak period every day with a fully topped-off Powerwall could save, by my estimate, as much as 3,650 kWh of peak usage per year. Added to the solar energy generated and used immediately, many users could avoid peak demand use from the grid altogether – at least on sunny days. This, depending on local rates and climate, could easily generate a return of 20 percent or higher.</p>
<h2>Focus on innovation</h2>
<p>So will the Tesla name and potential for seamless integration between the home energy storage and car markets (made possible with the merger) increase demand for SolarCity’s solar panels? It seems logical. Will the same integration as well as increased market share for SolarCity increase battery demand? Also logical. Will this advantage also hold for <a href="http://www.greentechmedia.com/articles/read/if-tesla-acquires-solarcity-success-will-depend-on-storage">industrial users who tend to value sourcing both from the same vendor</a>? Again, logical. </p>
<p>But the real game-changing question I see is: Will the increase in accumulated demand for batteries generate the opportunities for innovation? </p>
<p>By ramping up production at the Gigafactory, will Tesla find ways to lower battery cost and improve battery performance with better energy density (energy storage capacity relative to weight)? And will that lower cost and better performance attract more first-time users, broadening the market and increasing the likelihood of even better and cheaper batteries? </p>
<p>If you can extrapolate from Henry Ford, calculators, personal computers and even VCRs, you would also say this is very likely. As battery design improves and cost falls, the Powerwall battery should become more attractive economically and the the forthcoming <a href="https://theconversation.com/will-the-tesla-model-3-recharge-the-u-s-electric-vehicle-market-57171">Tesla Model 3 electric car</a> should be affordable for an ever wider demographic. I signed up for a Model 3, along with about <a href="http://fortune.com/2016/04/15/tesla-model-3-reservations-400000/">400,000</a> other people.</p>
<p>Is this the synergy that Musk is really banking on? I think so.</p><img src="https://counter.theconversation.com/content/64101/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>W. Rocky Newman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Critics don’t think Tesla can sell enough home batteries to justify its acquisition of SolarCity, but what they’re underestimating is the potential for innovation the Gigafactory brings.
W. Rocky Newman, Professor of Management, Farmer School of Business, Miami University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/54037
2016-03-21T19:28:09Z
2016-03-21T19:28:09Z
Lithium: Australia needs to recycle and lease to be part of the boom
<p><em>Australia is pivoting its economy away from resources like coal and iron ore, but are there other commodities we can bank on to take up some of the slack? In this <a href="https://theconversation.com/au/topics/future-commodities">“future commodities”</a> series we explore the economic future for commodities we’ve always relied on, and some we haven’t.</em></p>
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<p>Australia has an opportunity to capitalise on the increasing global demand for lithium batteries by developing recycling systems and creating models for leasing the resource.</p>
<p>Lithium is the third element in the periodic table and the lightest classified as a metal. This makes it a good choice in battery applications needing lightweight energy storage. Lithium-ion batteries are now increasingly common in smartphones, electric vehicles and indeed <a href="http://www.abc.net.au/news/2016-02-02/tesla-powerwall-what-it-means-for-australia's-energy/7130392">Tesla powerwalls</a>, the first of which was recently installed in Australia. </p>
<p>Because of this rising demand, Lithium is considered to be a “<a href="http://energy.gov/sites/prod/files/edg/news/documents/Critical_Materials_Summary.pdf">critical</a>” mineral by many countries. Currently, global demand is over <a href="http://minerals.usgs.gov/minerals/pubs/commodity/lithium/mcs-2016-lithi.pdf">32 thousand tonnes per year</a>. This is predicted to rise to <a href="http://publica.fraunhofer.de/documents/N-123314.html">between 80 to 280 thousand tonnes by 2030</a>, with a mid-range forecast shown in the figure below.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=590&fit=crop&dpr=1 600w, https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=590&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=590&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=742&fit=crop&dpr=1 754w, https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=742&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/114549/original/image-20160310-31867-1glcvcw.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=742&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Projected lithium supply and demand by continent.</span>
<span class="attribution"><a class="source" href="http://www.mdpi.com/2075-163X/2/1/65/htm">http://www.mdpi.com/2075-163X/2/1/65/htm</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The variation in demand forecasts over the next 15 years depends on the rate of uptake of electric batteries for vehicles and storage. They are also foreseen to continue rising through to 2050 and beyond. However, new battery technologies which use metals other than lithium (for example zinc-air or zinc-bromine) can be expected to increase their market share.</p>
<h2>New opportunities for innovation</h2>
<p>In order to meet future demand, <a href="http://www.mdpi.com/2075-163X/2/1/65">recycling of lithium will also need to rise</a> significantly. A report by the International Resource Panel shows historical<a href="http://www.unep.org/resourcepanel/Portals/50244/publications/UNEP_report2_Recycling_130920.pdf"> lithium recycling rates</a> are at less than 1 percent. <a href="http://www.sciencedirect.com/science/article/pii/S2214993714000037">Current challenges</a> to commercial recycling include limited volumes of waste batteries (as many are still in the useful phase of their life) and a lack of investment for piloting suitable recycling technologies.</p>
<p>However businesses and government must start planning now for collection and processing of this future waste stream, to ensure pathways are in place for reuse and recycling of what is a hazardous, yet valuable, waste. In particular, as lithium batteries rise past <a href="https://www.environment.gov.au/protection/publications/hazardous-waste-infrastructure-needs-capacity-assessment">50,000 tonnes per year in the waste stream</a> by 2030, the need rises for developing efficient sorting systems to isolate these batteries and moderate the <a href="http://www.flightsafetyaustralia.com/2014/09/lithium-battery-fire-sparks-mayday/">risk of fire</a>. </p>
<p>Without the requisite infrastructure for local recycling, the valuable metals in batteries will not be recovered, yet environmental impacts rise both at home and abroad, as for other <a href="http://www.step-initiative.org/">electronic waste</a>.</p>
<p>Looking to the future, firms in Australia might also consider new business models such as <a href="https://www.researchgate.net/publication/239068594_Sustainable_governance_of_scarce_metals_The_case_of_lithium">leasing instead of selling lithium</a>. This provides a mechanism for capturing value at multiple points along the supply chain (mining, battery manufacture, use, recycling) rather than relying on yesterday’s ‘dig-more sell-more’ model for national prosperity. </p>
<p>For example, by teaming up with battery manufacturers, Australian companies could be the first link in <a href="https://www.uts.edu.au/sites/default/files/final_vision_final_aug2011.pdf">a green supply chain</a>. This would involve mining lithium, processing it for use in batteries, leasing the lithium-in-batteries to users of power storage, then offering a collection chain for recycling.</p>
<p>In effect, this sells the access to lithium as a service, whilst promoting resource stewardship. Prime Minister <a href="http://www.theaustralian.com.au/opinion/columnists/greg-sheridan/nuclear-energy-a-great-economic-opportunity-for-australia/news-story/e36d9cf0a1e7eaa64fb6a5198093e40c">Malcolm Turnbull suggested something similar</a> for the uranium supply chain.</p>
<h2>Who will supply lithium in future?</h2>
<p>When asking ‘where will all the lithium come from?’, it’s important to bear in mind that not all sources of lithium are equivalent. Lithium generally comes from either hardrock mining, such as in Australia, or the evaporation of salt lakes (or brines), such as in <a href="https://en.wikipedia.org/wiki/Salar_de_Uyuni">Bolivia</a> and <a href="http://www.reuters.com/article/albemarle-chile-idUSL2N15H11K">Chile</a>. </p>
<p>Due to the differences in chemistry, it is easier for lithium from brines to go into lithium-ion batteries and for that from hardrock to be used for glasses and other applications. Putting hardrock lithium into batteries requires a further conversion process which adds to costs. </p>
<p>Several Australia operations are active in this space, Talison Lithium mines hardrock lithium at Greenbushes and has outlined a concept for a <a href="http://www.talisonlithium.com/projects/lithium-chemicals-plant">local plant to process to ltihium carbonate</a> for use in batteries and further research and development of conversion processes to bring down costs, this would improve Australia’s position in supplying global markets. Recent price rises in lithium have also prompted Western Australia’s <a href="http://www.generalmining.com/pdf/asx_releases/21_01_2016/GMM240%202016-01-21%20Mt%20Cattlin.pdf">Mt Cattlin mine to reopen</a>.</p>
<p>While Australia was the largest producer in <a href="http://minerals.usgs.gov/minerals/pubs/commodity/lithium/mcs-2016-lithi.pdf">2014</a>, South America is the hub of future growth. Chile is banking on a future boom to strengthen the health of its mining sector which has until now been focused on copper and indeed has established a <a href="http://www.indmin.com/Article/3523993/Chilean-government-to-retain-control-of-national-lithium-reserves.html">National Lithium Commission</a>. Also in South America, <a href="https://www.opendemocracy.net/democraciaabierta/rafael-sag-rnaga-l-pez/bolivia-s-lithium-boom-dream-or-nightmare">Bolivia</a> is sitting on huge salt flats containing lithium, but has not yet exploited them to any significant extent. In these emerging mineral economies in particular, as with many large resource development projects, social and environmental impacts must be carefully managed.</p><img src="https://counter.theconversation.com/content/54037/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Damien Giurco receives funding from the Australian Research Council, CSIRO (Wealth from Waste Cluster), government and non-government organisations including the International Union of Geological Sciences (Resourcing Future Generations) and the Stichting Deep Sea Conservation Coalition. He is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and is currently working with the Australian Battery Recycling Initiative on a project to collect small lithium ion batteries for recycling, funded by NSW Environmental Trust. He has also submitted a CRC Project application for funding on Breakthrough technology and stewardship for lithium battery recycling.</span></em></p><p class="fine-print"><em><span>Ben McLellan receives funding from Japan Society for the Promotion of Science. </span></em></p>
If Australia investments in technology to recycle and lease lithium, it could capitalise on its increasing use in batteries.
Damien Giurco, Professor of Resource Futures, University of Technology Sydney
Ben McLellan, Honorary Senior Research Fellow, The University of Queensland
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/54045
2016-02-08T04:35:59Z
2016-02-08T04:35:59Z
How to get the best value for money out of the coming home battery boom
<p>Home power storage batteries are coming to a house near you as the game-changing technology – which promises to let you store solar energy for later use when the sun isn’t shining – <a href="http://www.afr.com/technology/meet-the-first-australian-family-to-get-a-tesla-powerwall-on-their-house-20160128-gmgmnq">begins appearing across Australia’s suburbs</a>.</p>
<p>When new technologies are launched, they often cost quite a lot of money, so only a few people buy them. In marketing-speak, these people are “innovators” or “early adopters”. Then as more people buy the product the cost per unit goes down, in turn encouraging even more people to buy it, in a virtuous pricing circle known as <a href="https://books.google.com.au/books?id=9U1K5LjUOwEC&redir_esc=y">Rogers’ Diffusion Curve</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=525&fit=crop&dpr=1 754w, https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=525&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/110410/original/image-20160205-18277-15tjh4b.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=525&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A typical technology’s journey from obscure gadget to must-have item.</span>
<span class="attribution"><span class="source">Based on Rogers, E. (1962) Diffusion of innovations. Free Press, London, NY, USA</span></span>
</figcaption>
</figure>
<p>This phenomenon has been seen across many technologies over the past century, from hairdryers, to microwaves, to mobile phones. But what’s interesting is that the rate of adoption is <a href="http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.graphic.ready.html">accelerating</a>. We are adopting technology faster today than we did in the past.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=249&fit=crop&dpr=1 600w, https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=249&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=249&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=313&fit=crop&dpr=1 754w, https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=313&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/110411/original/image-20160205-18284-1d21c7h.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=313&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">New technologies are now reaching mainstream adoption much faster.</span>
<span class="attribution"><span class="source">Ray Wills</span></span>
</figcaption>
</figure>
<p>This situation has played out for rooftop solar panels. Over the past six years, Australia has gone from relatively few solar-powered homes to <a href="http://grattan.edu.au/wp-content/uploads/2015/05/822-sundown-sunrise4.pdf">around 1.4 million now</a>. And the same speedy uptake is set to take place for household battery storage. </p>
<p>In April 2015, Tesla <a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">unveiled</a> its home battery technology, the <a href="https://www.teslamotors.com/en_AU/powerwall">Powerwall</a>, which was launched in Australia last month. </p>
<p>The cost of the 7 kilowatt-hour battery in the United States was just US$3,000. When you convert that to the Australian dollar, and then add in the cost of an inverter, installation and retail mark-up, a system will cost around A$15,000. </p>
<p>Of course, it is unlikely to stay that expensive for long. Retailers may need to become more competitive, especially as battery prices begin to fall. But in the meantime, only a few early adopter households will buy it to start off with. Those who wait a while longer could find themselves at a much cheaper point on the price curve, at the same time that rising electricity tariffs make the cost more and more competitive.</p>
<h2>Shop around</h2>
<p>Tesla isn’t the only company that has a household battery system – other manufacturers such as <a href="http://rfisolar.com.au/browse-products/energy-storage/samsung-7-3kwh-all-in-one-energy-storage-system.html#.Vrf8qLl94UE">Samsung</a>, <a href="https://www.redenergy.com.au/energystorage">Panasonic</a>, <a href="http://www.byd.com/energy/ess.html">Build Your Dreams</a> and <a href="http://www.zenenergy.com.au/home/">Zen Energy</a> are entering the market, with some bidding to outprice Tesla. </p>
<p>But not all batteries are created equal. Like any product, there are variations in quality. </p>
<p>For those old enough to remember 1973, the <a href="http://www.powerhousemuseum.com/insidethecollection/2013/06/its-40-years-since-the-leyland-p76-car/">Leyland P76</a> car was wrought with quality and reliability issues and was considered one of Australia’s biggest automotive failures. Not all motor vehicles suffer the issues of the P76, and so it is with batteries. Consumers should make sure that the kit they are buying is certified to Australian standards and comes with independent quality assurance. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=359&fit=crop&dpr=1 600w, https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=359&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=359&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=452&fit=crop&dpr=1 754w, https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=452&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/110554/original/image-20160208-18259-uhpfjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=452&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Lemon, yellow.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ALeyland_P76_yellow.jpg">Chris Keating/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>This quality control needs to be applied not just to the battery but also to the inverters and charge controllers. Consumers should buy from companies that have been around for a while and that offer long manufacturer warranties. Good-quality batteries will last around 12-15 years, and solar panels about 25 years. </p>
<p>In some Australian cities, you could get a return on your investment within 10 years, even at early-adopter prices. This will obviously get even shorter as battery prices decline and electricity tariffs go up.</p>
<h2>Buy batteries and panels together</h2>
<p>If you already have solar panels, you are at a slight disadvantage relative to those installing solar panels and batteries together. Those with existing solar panels will already have an inverter that can’t be used for the battery system. But if the solar panels and batteries are bought at the same time, a single hybrid inverter can be chosen. </p>
<p>As shown in a <a href="http://www.abc.net.au/catalyst/stories/4398364.htm">recent ABC Catalyst special on battery technology</a>, there are also various different battery types and technologies being developed. Our research has developed a <a href="http://www.landcorp.com.au/innovation/wgv/Latest/Shared-solar-power-on-trial-in-Australian-first/">microgrid for solar and storage on strata apartments</a>. This allows tenants to pay their electricity bill to the strata company to provide an additional revenue stream to owners to justify the capital investment in solar and storage. In other words, strata companies can effectively become small utilities. </p>
<p>This example is indicative of the wider change in our energy system, from being a centralised system to a distributed, bi-directional one. Energy regulators are looking to change tariffs to reflect this new energy paradigm. Households should bear in mind that governments may change tariffs and pricing structures, which will alter the investment proposition and payback period. </p>
<p>Even with so many moving elements, sunny Australia is well positioned to take advantage of the battery revolution.</p><img src="https://counter.theconversation.com/content/54045/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jemma Green receives funding from the CRC for Low Carbon Living and the CSIRO.</span></em></p><p class="fine-print"><em><span>Peter Newman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
The ‘early adopters’ of home battery storage will pay significantly more than those who come later, but it won’t be long until prices drop enough for many more to get on board.
Jemma Green, Research Fellow, Curtin University
Peter Newman, Professor of Sustainability, Curtin University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/48725
2015-10-14T08:52:20Z
2015-10-14T08:52:20Z
Will the Supreme Court kill the smart grid?
<figure><img src="https://images.theconversation.com/files/97659/original/image-20151007-7335-13lkmc4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Supreme Court will decide a case that will have a big effect on distributed energy technology, including batteries. </span> <span class="attribution"><a class="source" href="http://www.teslamotors.com/sites/default/files/images/presskit/teslaenergy_utility2.jpg?617">Tesla</a></span></figcaption></figure><p>On April 30, Tesla’s Elon Musk took the stage in California to introduce the company’s Powerwall <a href="https://theconversation.com/has-tesla-cracked-the-grid-energy-storage-problem-41131">battery energy storage system</a>, which he hopes will revolutionize the dormant market for household and utility-scale batteries. </p>
<p>A few days later, the Supreme Court <a href="http://www.supremecourt.gov/orders/courtorders/050415zor_7648.pdf">announced</a> that it would hear a case during its fall term that could very well determine whether Tesla’s technology gamble succeeds or fails. Justices will hear arguments on October 14 to address <a href="http://www.utilitydive.com/news/supreme-court-to-hear-ferc-order-745-case-over-demand-response-rules/393722/">questions</a> having to do with federal jurisdiction over the fast-changing electricity business.</p>
<p>At issue is an obscure federal policy known in the dry language of the electricity business as “Order 745,” which a lower court <a href="http://www.greentechmedia.com/articles/read/what-us-appeals-court-decision-on-ferc-order-745-means-for-demand-response">vacated last year</a>. </p>
<p>Order 745 allowed electricity customers to be paid for reducing electricity usage from the grid – a practice known as “demand response.” It also stipulated that demand response customers would be paid the market price for not using the grid – like the power industry’s version of paying farmers not to grow corn. </p>
<p>Paying people not to use electricity may sound preposterous – one <a href="https://www.epsa.org/forms/uploadFiles/33552000003CA.filename.SCOTUS_Amicus_Utility_Law_Project_of_NY_09082015.pdf">critique</a> of Order 745 was that it permitted overly generous prices and lax performance standards, basically making demand response a license for electricity consumers to print money. </p>
<p>But research, including <a href="http://www.sciencedirect.com/science/article/pii/S0301421508003364">some of my own</a>, has shown that demand response can make markets operate more efficiently, temper the market power held by power generating companies and reduce the risk of blackouts. </p>
<p>In other words, as long as the prices and rules are right, paying people to use less electricity isn’t such a crazy idea. Indeed, it’s just one way that <a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">new technologies</a>, including rooftop solar and batteries, could make the grid cleaner and lower prices.</p>
<h2>Smart grid on trial</h2>
<p>The Order 745 case has already proven to be a major disruption in the US electricity market. It has thrown uncertainty into business models, market prices, and in some cases even the <a href="http://www.powermag.com/ferc-order-745-and-the-epic-battle-between-electricity-supply-and-demand/?pagenum=2">planning of the power grid</a> to ensure reliability in the coming years. </p>
<p>The case, however, ultimately goes far beyond demand response. </p>
<p>The issue at hand is all about the ability of the federal government to set market rules for local power systems – that is, the portion of the grid that reaches individual homes and businesses – versus the regional grid that transports power over long distances across the US. It therefore has implications for the value of rooftop solar systems, backup generators, and even Tesla’s Powerwall battery – basically anything that would allow individual customers to supply energy to the power grid or reduce demands on an already strained infrastructure. </p>
<p>In fact, Order 745 could very well be the biggest energy-related Supreme Court case in decades.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Historically, federal authorities, notably the Federal Energy Regulatory Commission (FERC), had jurisdiction only over long-distance transmission lines.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dukeenergy/4587281064/in/photolist-7Zn1QQ-oDJ5bb-oUbeDG-bJ4FQ4-7kNZb7-dxpuKP-dxpvfH-9HHHED-aXfW9R-8tA43A-dVNJWj-qKHFM5-qHvdEu-qKHFrq-qKN2o4-qKCvzv-dxpuVB-er3jAo-eq75JT-dCfstr-dCkTmG-dCftkg-dCfuf4-dCkV7Q-dCkUhJ-dCkUwL-fvRZZ5-9Fb6pT-74ptHF-eeqPaJ-e2B2ny-doQojt-bR4VJM-pG8gby-ykK4yM-yBiahu-ra1HTr-r7SCtG-raaqWM-qSArS9-fvBJ8P-xFepaU-qBzwSV-rbRmVK-eFGCvA-eFAwJH-eFAwNZ-eFGCss-bR4VHp-epUVo6">Duke Energy</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The significance of this particular case is rooted in the two different and opposing directions in which technology, policy and good old consumer behavior are pushing and pulling the business of electricity. </p>
<p>On the one hand is a federal policy of playing a greater role in the business of managing the regional power grid, supplanting the traditional electric utility. Regional organizations now manage portions of the national grid for more than 70% of all electricity consumed in the US. </p>
<p>The other trend is the increasing democratization of electric power production through rooftop solar photovoltaics, small-scale energy storage devices (like Tesla’s Powerwall) and increased interest in “micro-grids” to produce, distribute and manage electricity on a localized scale. Local energy is rapidly becoming the new local food. (There has even been a buzzword – “loca-volt” – coined to capture this movement.)</p>
<p>The simultaneous trends of regional grid management and democratized electricity supply are now in tension with one another, not for any technological reason, but primarily for reasons of policy and economics. </p>
<p>The Federal Power Act, which was passed in 1935, attempts to draw a “bright line” between those elements of the electricity system that are under federal versus state jurisdiction. </p>
<p>The federal role is to regulate the regional transmission grid – including the power lines that transport electricity long distances and across state lines – and wholesale markets for buying and selling power. The role of the states is limited to the local grid that delivers electricity to homes and businesses and to retail sales.</p>
<p>Market rules like Order 745 provided a pathway for these two trends to be complementary, rather than in opposition, without a patchwork of individual state regulations. </p>
<p>Want solar panels on your house? Sure thing – and those solar panels could also provide power to the grid at a price, perhaps avoiding the need to build some new power plants. Or you could provide demand response by using less electricity from the grid during certain days, and more from your solar panels. Order 745 created rules to compensate people and businesses on the wholesale energy markets to lower power use, whether it was from a bank of giant batteries or highrise buildings in New York City. </p>
<h2>Distributed energy technologies</h2>
<p>Demand response and Order 745 are so significant because they have blurred the bright line between federal and state control over the electricity sector. This bright line is increasingly becoming an artifact of our federalist legal structure. </p>
<p>A regional grid operator’s primary function is to ensure the lights stay on by having enough power to match the demand. But there is no technological reason that demand response, backup generators or energy storage banks, electric vehicles, and other emerging technologies that are all part of the “smart grid” could not serve the same function for regional power grids that large power plants do today. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=371&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=371&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=371&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=466&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=466&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=466&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Supply power to the grid through solar panels and other distributed energy products and services, including demand response, can be more cost-effective and cleaner than building new power plants.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cocreatr/5417867928/in/photolist-9fKZo1-9fKYkJ-eMzno9-gts9JW-gts9u7-9dxZcs-6gjgXt-9duTLn-9duUrx-9dy1cf-dp55iH-dp55eP-9d5vQ3-8T8fEQ-9d2qwD-c3bZ9d-9dxXX7-6aLfiu-ceWmTs-aXSp6v-g9Yao2-2dRUst-9d5vVG-9dxZzJ-9dxXHG-9dxYkj-9duUcv-9dxZ4U-9dxYZY-9duVAZ-79uvHv-9duWjg-9dxXPQ-9dxZ97-9duVwt-4tmVnd-uKkP6h-c2REkS-9duUM2-9dxZJG-gtsqPt-6Jb6DT-eZg3Ps-abmSEb-6GWtzJ-amp4zo-6sji9e-abmTDj-9dxXvy-9duTWv">cocreatr/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>And there are good reasons to believe that harnessing <a href="http://www.greentechmedia.com/articles/read/dueling-charts-of-the-day-peaker-plants-vs.-green-power">loca-volt energy and energy efficiency</a> will actually be cheaper than building new power plants for times when large-scale wind and solar plants aren’t available (France and some places in the US already do this, through controllable hot water heaters).</p>
<p>Striking down Order 745 would make the bright line ever so brighter, but it would also complicate the economic environment for one of the most innovative segments of the electricity sector. </p>
<p>This case, ultimately, is far more significant than getting paid for not using electricity. It’s about who gets to set the rules of the road for emerging technology in the electricity sector – the states or the federal government – and whether the US will be able to modernize its energy policy the same way that it would like to modernize its power grid. (Full disclosure: My university employer, Penn State, has been involved in a <a href="https://smartenergyacademy.psu.edu/gridstar/about-gridstar">demonstration project</a> that uses battery energy storage to balance fluctuations on the power grid in Pennsylvania and I am an advisor to the <a href="http://microgridsystemslab.com/">Microgrid Systems Laboratory</a> in New Mexico.) </p>
<p>Before launching Tesla’s wall-mounted batteries, perhaps Mr Musk should have sat on his hands for a bit longer.</p>
<p><em>This article has been updated with more detail on the author’s involvement in microgrid projects.</em></p><img src="https://counter.theconversation.com/content/48725/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Seth Blumsack receives funding from the US National Science Foundation, US Department of Energy and the Pennsylvania Department of Environmental Protection.</span></em></p>
The Supreme Court hears a case that will decide whether homes and businesses can earn money from distributed energy technologies, including demand response and home battery systems.
Seth Blumsack, Associate Professor, Penn State
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/46002
2015-08-19T21:05:06Z
2015-08-19T21:05:06Z
Elon Musk’s Brave New World: it worked for Henry Ford; why not Tesla?
<figure><img src="https://images.theconversation.com/files/92317/original/image-20150818-12421-6fwbwl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">But can you make an EV at half the price of that one? </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/pestoverde/8765031426/in/photolist-emx5tu-4qNk5S-dYLXoz-rqMnv2-gAMfgW-7TWasM-92iXxj-oNtTSq-4TTtxz-aXeXtc-uC8AkW-6WCd8-DTv2Y-gvG6PK-uMdB5p-5AFqF6-5AKFtE-oL2F5q-5AFqDe-6dNvtk-vWRj6g-cec78Y-nX97As-8NFnMJ-pHoy8x-gbC7SG-gm9SkQ-cecZ8y-5uzuFL-uYPC5L-gmadck-7PYNBG-cech3J-cecUjQ-6aJA3F-5yRz4v-5yRnYp-atHJJo-atAnS1-5yVq4s-pfEcLr-hK3mPS-aB2bvJ-817uJv-bzs2ao-7UMCNo-cuYoEC-8NYNaD-5yRsQM-uqRBs9">Maurizio Pesce/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The share price of Tesla Motors shot up this week after a financial analyst said that the electric vehicle maker is “<a href="http://blogs.wsj.com/moneybeat/2015/08/17/tesla-is-uniquely-positioned-to-dominate-auto-business/">uniquely positioned to dominate</a>” the auto industry. </p>
<p>Is Tesla, with its tightly integrated supply chain, following the strategy of another one-time dominant automaker – the Ford Motor Company – of over 100 years ago? Can it revolutionize the world by making an affordable electric car for the masses, much the way Henry Ford did with the Model T in 1908? </p>
<p>Henry Ford took control of his supply chain and made his own parts rather than buy from suppliers, which gave the company the scale needed to <a href="https://en.wikipedia.org/wiki/Ford_Model_T">improve performance and lower costs</a>. Now Musk is building a new “giga” battery factory, giving Tesla more control over this strategic component. Will it work out the same as for Ford? </p>
<h2>Putting Ford in the black</h2>
<p>In his 1926 book, <a href="http://www.amazon.com/Today-Tomorrow-Special-Fords-Classic/dp/0915299364/ref=sr_1_1?ie=UTF8&qid=1439839761&sr=8-1&keywords=today+and+tomorrow">Today and Tomorrow</a>, Ford claimed his integrated approach was the key to his success (“if you want it done right, do it yourself”). In fact, he claimed to mine iron ore in Minnesota, ship it to the famous River Rouge facility in Detroit and have it sitting as a Model T in a Chicago driveway in 84 hours! However, at the time, complete standardization (yes, Ford is <a href="https://www.thehenryford.org/exhibits/showroom/1908/model.t.html">said to have stated</a> “You could have any color you wanted as long as it was black”) was necessary to make this happen. No options were available as they are for today’s cars, but standardization led to lower prices.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=471&fit=crop&dpr=1 600w, https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=471&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=471&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=592&fit=crop&dpr=1 754w, https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=592&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/92320/original/image-20150818-12428-1f0mfjm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=592&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Putting folding roofs onto Model T’s in 1915: part of Henry Ford’s moving assembly line and standardized work process.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/thehenryford/4974892076/in/photostream/">The Henry Ford/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Prior to the Model T, the typical car’s sticker price would often hit US$2,000, or almost five years of wages, which put cars out of reach for all but the rich. Working to make his car affordable, Ford sold the <a href="https://en.wikipedia.org/wiki/Ford_Model_T">Model T for $260 by 1926</a>, leading to massive market share – over <a href="https://en.wikipedia.org/wiki/Car_of_the_Century">50% of the automobiles on the road worldwide were Ford’s</a>. </p>
<p>Ford also paid his workers a startling <a href="http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/">$5 per day to reduce employee turnover</a>. </p>
<p>By this time the average working household income had reached about $1,300 per year. That put the Model T at two to four months of a typical factory worker’s wages, something comparable to or less than today’s economy car! </p>
<h2>Huxley’s Brave New World and Fordism</h2>
<p>Ford’s significance can even be seen in Huxley’s classic futuristic science fiction work <a href="https://en.wikipedia.org/wiki/Brave_New_World">Brave New World</a> from 1932. Huxley anticipated a world with intercontinental rocket plane travel and TV networks, in vitro fertilization, cloning and genetic engineering. Huxley also saw Ford’s approach to be so central to the future that Fordism – Ford’s system of mass production – would become the primary religion! </p>
<p>Huxley correctly saw so many things to come, yet clearly we don’t all worship Henry Ford today. So why did this prediction not come true? Maybe it is because not long after the book was written, the growing design complexity of cars and the demands of customers made Ford’s black-only Model T no longer competitive. </p>
<p>To offer multiple lines of vehicles and options, Ford’s integrated supply chain had to be broken into separate companies supplying specialized sets of products. No one company could handle it all. </p>
<p>Yet by the 1980s, local area networks meant computers could autonomously control machines and make multiple products from the same facility at relatively low costs. Then in the 1990s, the internet made physical proximity unnecessary for achieving economies of scale since manufacturers didn’t need to control every component in the supply chain. </p>
<p>What Huxley missed, in other words, was the impact of computers and IT innovations, considered one of the key facilitators to modern supply chain management. </p>
<h2>What can Musk learn from Ford?</h2>
<p>Let’s roll the clock ahead 100 years. Elon Musk and Tesla Motors are looking to bring the electric car to the masses much the way Ford did with the Model T. </p>
<p>Parallels include decisions to build a “giga” factory to make batteries that are currently sourced from <a href="http://www.greentechmedia.com/articles/read/Reports-Tesla-Selects-Nevada-as-Giga-Battery-Factory-Site%20;http://blogs.wsj.com/corporate-intelligence/2014/05/14/the-logic-of-teslas-gigafactory-the-economics-are-a-no-brainer/">Panasonic in Japan</a>, paying a premium wage to workers to reduce turnover, and planning to make an electric vehicle priced for the mass market – the upcoming Model 3. </p>
<p>Even model names – Tesla sells the Model S and soon the Model X – may be more than coincidental. Will it work for Tesla the way it worked for Ford? Does today’s technology allow Tesla to do even more than Ford? </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/RSHgz98B0MQ?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Elon Musk: Ford was right about vertical integration and combining production with engineering.</span></figcaption>
</figure>
<p>The battery pack is the single most important and expensive component in an electric car. A battery can exceed $15,000 per vehicle (or <a href="http://www.economist.com/news/technology-quarterly/21651928-lithium-ion-battery-steadily-improving-new-research-aims-turbocharge">$500 per kilowatt-hour</a> of capacity). The Nissan Leaf electric car has a 24 kilowatt-hour battery and has an average range of <a href="http://www.nissanusa.com/electric-cars/leaf/charging-range/range/">84 miles</a>. </p>
<p>Some industry experts believe batteries need to cost about <a href="http://www.economist.com/news/technology-quarterly/21651928-lithium-ion-battery-steadily-improving-new-research-aims-turbocharge">$100 per kilowatt-hour and have almost triple the current range</a> to be truly mass market. Achieving that sort of reduction in cost and improvement in performance comes from manufacturing at greater scale, rather than relying to suppliers. </p>
<p>In other words, as Tesla makes more batteries, it gains more opportunities to refine production and product design. </p>
<p>Ford found that out, and Tesla will as well. It plans to use most of the “giga” factory capacity in Reno, Nevada to supply Tesla’s auto assembly plant in Fremont, California, but also make <a href="https://theconversation.com/has-tesla-cracked-the-grid-energy-storage-problem-41131">batteries for utilities, homes and businesses</a>. </p>
<p>Because there are common battery designs and production, Tesla will be able to transfer any product and process improvements between batteries for vehicles and the grid. Tesla estimates that they will reduce battery costs <a href="http://www.teslamotors.com/sites/default/files/blog_attachments/gigafactory.pdf">by over 30%</a> with the “giga” factory. </p>
<p>Claims that Tesla with <a href="http://www.freep.com/story/money/cars/2015/04/13/tesla-battery-plant-nevada-wages/25723015/">pay an average of $25 per hour in Reno have not been confirmed by the company</a>, but the ability to retain high-caliber workers is necessary to leverage the accelerated experience that comes from scale into lower costs and improved design. Ford demonstrated that a long time ago. Tesla appears to have learned that lesson.</p>
<h2>What will it take to be the Next Model T (or Model 3!)?</h2>
<p>Musk’s public goal of 500,000 cars per year and a $35,000 price tag on the Model 3 <a href="http://www.bloomberg.com/news/articles/2015-05-07/tesla-battery-factory-runs-ahead-of-plan-to-power-cars-homes">will need every bit of output and resulting innovation the “giga” factory creates</a>. Ford’s limitations in communicating along his supply chain meant very little variation in what was done or how things were done. </p>
<p>Today, models for left side driving, back seats big enough for customers who want a chauffeur, a third row of seats, four doors, two doors: all add volume but unfortunately bring complexity as well. Today’s computer-controlled process technology makes design variety much more scalable than in 1920. <a href="http://scholar.google.com/scholar?q=Newman%2C+W.+Rocky%2C+Mark+Hanna%2C+and+Mary+J.+Maffei.+%22Dealing+with+the+uncertainties+of+manufacturing%3A+flexibility%2C+buffers+and+integration.%22+International+Journal+of+Operations+and+Production+Management+13+%281993%29%3A+19-19.&btnG=&hl=en&as_sdt=0%2C36">Research</a> and <a href="http://www.emeraldinsight.com/doi/abs/10.1108/19355181200900002">practice</a> <a href="http://www.amazon.com/Integrated-Operations-Management-Perspective-Advantage/dp/0324377878/ref=sr_1_2?ie=UTF8&qid=1439839208&sr=8-2&keywords=hanna+newman">show</a> that now, the ability to collaborate with others (within or outside of Tesla) makes physical proximity moot as well. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=281&fit=crop&dpr=1 600w, https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=281&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=281&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=353&fit=crop&dpr=1 754w, https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=353&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/92318/original/image-20150818-12443-143glcy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=353&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An artist’s rendition of Tesla’s gigafactory now under construction in Nevada which will make batteries for cars and grid energy storage.</span>
<span class="attribution"><a class="source" href="http://www.teslamotors.com/gigafactory">Telsa Motors</a></span>
</figcaption>
</figure>
<p>Unlike Ford, Tesla can use a global supply chain to make a wide variety of products while still pursuing the cost benefits of large-scale manufacturing. At the same time, Tesla can focus on making in-house “core” components, like batteries, with high learning and innovation potential. </p>
<p>Henry Ford had to control it all because even a missing hubcap could stop the line. Musk can now choose to outsource the more commodity-like components where the potential for process or product design improvement is small. </p>
<h2>Not there yet</h2>
<p>Musk has increased production from 10,000 vehicles in 2012 to a projected 50,000 by the end of 2015. However, forecasts and supply issues for a variety of parts (especially batteries) are <a href="http://seekingalpha.com/article/3268965-teslas-battery-supplier-panasonic-forecasts-drastically-less-growth-than-forecast-by-tesla">causing scheduling hiccups</a>, which has made <a href="http://seekingalpha.com/article/3443586-tesla-another-reset-of-expectations?auth_param=17cvng:1at2ojj:095b14a3d242f90bcf4fb237255bdad3&dr=1">Wall Street anxious</a>. </p>
<p>While the new “giga” factory coming online in the next couple of years (and others like it) may help achieve many of the needed performance and cost objectives, Tesla is not there yet. Here are three things the company needs to remember to achieve its goal of mass-market electric cars: </p>
<ul>
<li><p>First, keep your eye on the <a href="http://www.amazon.com/Integrated-Operations-Management-Perspective-Advantage/dp/0324377878/ref=sr_1_2?ie=UTF8&qid=1439839208&sr=8-2&keywords=hanna+newman">core aspects</a> of your business that define your <a href="http://www.emeraldinsight.com/doi/abs/10.1108/19355181200900002">competitive strategy</a>. Tesla making their own batteries fits their strategy of a high-performance, low-cost electric car for the masses. Accumulating experience here moves them toward both volume and cost goals. These are both defined criteria necessary and sufficient for strategic success. </p></li>
<li><p>Second, avoid allocating resources to noncore aspects because the payback is not there. Shortages or failures in hubcaps or trunk carpeting are as much problems now for <a href="http://seekingalpha.com/article/3443586-tesla-another-reset-of-expectations?auth_param=17cvng:1at2ojj:095b14a3d242f90bcf4fb237255bdad3&dr=1">Tesla as for Ford</a>. But you can outsource to supply chain partners far more easily now than then. </p></li>
<li><p>Finally, new products or variations of existing ones <a href="http://www.amazon.com/Integrated-Operations-Management-Perspective-Advantage/dp/0324377878/ref=sr_1_2?ie=UTF8&qid=1439839208&sr=8-2&keywords=hanna+newman">should be consistent with maintaining your core competency</a>. That is the key to transferring innovation. If adding scale through color choices or design combinations can add to accumulated experience in the core areas without unnecessarily adding to the burden of complexity, great!</p></li>
</ul>
<p>Ford’s view on color choice is no longer relevant. But Tesla’s Musk can still learn from Henry Ford’s strategy of making strategic components. Making batteries for home and business can help Tesla fuel more innovations in car batteries and vice versa.</p><img src="https://counter.theconversation.com/content/46002/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>W. Rocky Newman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Elon Musk of Tesla Motors wants to build an affordable, mass-market electric car. What can Tesla learn from another auto innovator – Henry Ford?
W. Rocky Newman, Professor of Management, Farmer School of Business , Miami University
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/42859
2015-07-02T05:14:01Z
2015-07-02T05:14:01Z
Tesla batteries might power your home but stored fuels will still run the country
<figure><img src="https://images.theconversation.com/files/87020/original/image-20150701-27114-1uibzf6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Each lump is an effective – if dirty – primary battery.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/oatsy40/9333525319/">oatsy40</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Although Tesla’s Powerwall battery storage is likely to be a <a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">disruptive force</a> for electrical energy systems around the world, it is not going to supplant the major forms of electrical energy storage anytime soon, and is ill-suited to storing energy over longer timeframes such as between seasons.</p>
<p>When powering a modern economy, electrical energy comes with one major disadvantage – it requires that supply and demand must be balanced within strict limits at all times, as an imbalance will lead to voltage changes that can damage connected equipment and even the networks themselves. This challenge of network balancing has conventionally been managed by keeping the electricity “stored” in fossil or nuclear fuels until it is required. </p>
<p>This presents a storage problem for renewables, especially weather-dependent wind and solar. As we cannot hope to store the weather, we have to instead store the generator’s output, which is the electricity.</p>
<p>This is what Tesla’s Powerwall and the bigger Powerpack both intend to help with. At full capacity Tesla’s first Gigafactory is planned to produce batteries totalling <a href="http://www.teslamotors.com/gigafactory">35 GWh<sub>e</sub></a> (gigawatthours electrical) each year. It’s an impressive figure – enough to power England, Scotland and Wales for about an hour.</p>
<p>However, to put this into perspective, Great Britain (Northern Ireland is counted separately) stores on average 800 times as much energy in its coal stockpiles alone. The chart below shows the total electrical energy equivalent stored in its coal stockpiles over the past two decades, with the amount stored tending to peak each autumn in preparation for an increase of electrical demand over winter. (The 2009 spike was partly caused by power plants <a href="http://uk.reuters.com/article/2009/11/17/us-britain-winter-fuel-idUKTRE5AG2P820091117">stocking up on cheap coal</a> after the financial crash). Over these two decades Great Britain has averaged just over 30,000GWh<sub>e</sub> of electrical energy stored this way.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=271&fit=crop&dpr=1 600w, https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=271&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=271&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=340&fit=crop&dpr=1 754w, https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=340&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/84094/original/image-20150605-8725-hsz1ja.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=340&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">GB electrical energy stored in coal stockpiles since 1995.</span>
<span class="attribution"><a class="source" href="https://www.gov.uk/government/statistics/electricity-chapter-5-digest-of-united-kingdom-energy-statistics-dukes">Author's calculations based on DECC data</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Great Britain also has up to 32,000GWh of natural gas in long-term storage (<a href="http://www.centrica-sl.co.uk/index.asp?pageid=574">which dropped from 41,400GWh earlier this year</a>). While most is used directly for cooking or heating, the rest is consumed to make electricity. It’s tough to know exactly what proportion this is, since it’s difficult to apportion gas that came directly from storage as opposed to gas that came via liquified natural gas ships or through pipelines.</p>
<p>However if we estimated that 30% ends up in power plants with an efficiency of 50% then the electrical energy stored is around 4,800GWh<sub>e</sub>. Again, far more than Tesla’s Gigafactory annual 35GWh<sub>e</sub> output.</p>
<p>It’s even harder to tell how much energy is stored in Great Britain’s reserves of nuclear fuels of uranium and plutonium – the information is classified.</p>
<h2>Fuels are still needed</h2>
<p>These simple calculations show Great Britain remains overwhelmingly dependent on fossil fuels to store its electrical energy. The country needed nearly 800 GWh<sub>e</sub> of electrical energy in an average day last year, which suggests that batteries would have some way to go to supplant fuels, even for a day.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=234&fit=crop&dpr=1 600w, https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=234&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=234&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=294&fit=crop&dpr=1 754w, https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=294&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/87067/original/image-20150702-27154-18356s.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=294&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">GB daily electrical energy demand in 2014.</span>
<span class="attribution"><span class="source">Own calculations; DECC data</span></span>
</figcaption>
</figure>
<p>This storage of vast amounts of energy in fossil fuels is typical of many modern economies as we have become accustomed to the flexibility that they allow us; they are able to decouple supply from demand by location as well as by time, and at a phenomenally low cost for storage.</p>
<p>Regardless of the <a href="https://theconversation.com/battery-costs-drop-even-faster-as-electric-car-sales-continue-to-rise-39780">falling price</a> of batteries (Tesla’s or anyone else’s) they are always likely to be ill-suited to the long-term seasonal storage of thousands of GWhs of energy. Batteries are simply the wrong technology.</p>
<h2>What is the answer then?</h2>
<p>But the fuels we mainly rely on for electrical storage – coal and gas – are not ultimately sustainable, and contribute to increased CO<sub>2</sub> emissions if burned without carbon capture. So if fossil fuels and batteries are not the answer to the seasonal storage of electricity – what is?</p>
<p><a href="https://theconversation.com/pumping-co2-underground-can-help-fight-climate-change-why-is-it-stuck-in-second-gear-37572">Carbon capture and storage</a> holds out the promise of the continued use of fossil fuels, with all the fuel storage advantages this would allow. Additionally, fuels such as <a href="http://www.itm-power.com/sectors/power-to-gas-energy-storage">hydrogen</a> or synthetic methane could be generated using low-cost, low-carbon energy and stored at scale too. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=259&fit=crop&dpr=1 600w, https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=259&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=259&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=326&fit=crop&dpr=1 754w, https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=326&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/84439/original/image-20150609-10689-1k84tvy.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=326&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Comparison of Tesla’s 10kWh Powerwall with 4kg of coal.</span>
<span class="attribution"><a class="source" href="http://www.teslamotors.com/en_GB/presskit">Powerwall image © Tesla</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>A continued use of fuels isn’t necessarily competition for Tesla’s disruptive new battery packs; the two complement each other. They are different horses for courses, as not all energy storage is the same, and in the long run we are going to require both.</p>
<p>Tesla’s batteries aren’t about to take over the world just yet, especially if you count fuels as “energy storage”. But if the company goes on to produce a similarly disruptive force in the area of power-generated fuels, that really would be a gamechanger. Lets hope it or some other firm does soon – then we would truly have the components to decouple our economies from carbon emissions.</p><img src="https://counter.theconversation.com/content/42859/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Grant Wilson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Fancy new battery technology is great – but still far off the scale required to put a serious dent in carbon usage.
Grant Wilson, Research Associate, Environmental and Energy Engineering Research Group, Chemical and Biological Engineering, University of Sheffield
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/41358
2015-06-02T20:03:40Z
2015-06-02T20:03:40Z
The battery revolution is exciting, but remember they pollute too
<figure><img src="https://images.theconversation.com/files/83334/original/image-20150529-12380-1twwe1l.jpg?ixlib=rb-1.1.0&rect=4%2C150%2C1592%2C902&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Batteries can cut carbon emissions, but mining the metals and other resources needed to make them can be a dirty business.</span> <span class="attribution"><span class="source">Jon Seb Barber/Wikimedia Commons</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The recent <a href="https://theconversation.com/the-winners-and-losers-in-teslas-battery-plan-for-the-home-41151">unveiling</a> by Tesla founder Elon Musk of the low-cost <a href="http://www.teslamotors.com/powerwall">Powerwall</a> storage battery is the latest in a series of exciting advances in battery technologies for electric cars and domestic electricity generation. </p>
<p>We have also seen the development of an <a href="http://www.theglobeandmail.com/technology/new-inexpensive-aluminum-ion-battery-set-to-outlast-competitors/article23829686/">aluminium-ion battery</a> that may be safer, lighter and cheaper than the lithium-ion batteries used by Tesla and most other auto and technology companies. </p>
<p>These advances are exciting for two main reasons. First, the cost of energy storage, in the form of batteries, is <a href="https://theconversation.com/battery-costs-drop-even-faster-as-electric-car-sales-continue-to-rise-39780">decreasing significantly</a>. This makes electric vehicle ownership and home energy storage much more attainable. </p>
<p>The second, related reason is that these cheaper green technologies may make the transition to a greener economy <a href="https://theconversation.com/affordable-batteries-for-green-energy-are-closer-than-we-think-28772">easier and faster</a> than we have so far imagined (although, as has been <a href="https://theconversation.com/energy-storage-is-crucial-but-its-not-the-only-piece-in-the-puzzle-41226">recently pointed out on The Conversation</a>, these technologies are only one piece of the overall energy puzzle). </p>
<h2>Beware the industrial option</h2>
<p>These technological advances, and much of the excitement around them, lend themselves to the idea that solving environmental problems such as climate change is primarily a case of technological adjustment. But this approach encourages a strategy of “superindustrialisation”, in which technology and industry are brought to bear to resolve climate change, through resource efficiency, waste reduction and pollution control. In this context, the green economy is presented as an inevitable green technological <a href="https://www.flickr.com/photos/27077390@N00/4443967070/">economic wave</a>. </p>
<p>But the prospect of this green economic wave needs to be considered within a wider environmental and social context, which makes solving the problems much more complex. Let’s take electric vehicles as an example. </p>
<p>The ecological damage of cars, electric or otherwise, is partly due to the fact that the car industry generates more than 3 million tonnes of <a href="https://www.e-elgar.com/shop/greening-the-car-industry?___website=uk_warehouse">scrap and waste</a> every year. In 2009, <a href="http://www.theguardian.com/business/2010/jan/06/us-cars-sales-record-low">14 million cars</a> were scrapped in the United States alone. </p>
<p>The number of cars operating in the world is expected to climb from the <a href="http://businesscenter.jdpower.com/news/pressrelease.aspx?ID=2010213">current 896 million to 1.2 billion</a> by 2020. The infrastructure associated with growing vehicle use, particularly roads, also makes a significant contribution to the destruction of ecosystems and arguably has important social costs.</p>
<p>Electric vehicles (EVs) offer a substantial greenhouse gas emission improvement from the internal combustion engine. However, this improvement depends on green electricity production. </p>
<p>An EV powered by average European electricity production is likely to reduce a vehicle’s global warming potential by <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1530-9290.2012.00532.x/full">about 20%</a> over its life cycle. This is not insignificant, but it is nowhere near a zero-emission option. </p>
<p>In large part, the life-cycle emissions of an electric vehicle are due to the energy-intensive nature of battery production and the associated mining processes. Indeed, there are questions around battery production and resource depletion, but perhaps more concerning is the impact that mining lithium and other materials for the growing battery economy, such as <a href="http://www.bloomberg.com/news/articles/2014-03-14/teslas-in-california-help-bring-dirty-rain-to-china">graphite</a>, will have on the <a href="http://www.sciencedirect.com/science/article/pii/S0306261911008580">health of workers and communities</a> involved in this global production network. </p>
<p>Processes associated with lithium batteries may produce adverse respiratory, pulmonary and neurological <a href="http://www2.epa.gov/sites/production/files/2014-01/documents/lithium_batteries_lca.pdf">health impacts</a>. Pollution from graphite mining in China has resulted in reports of “<a href="http://www.miningweekly.com/article/chinese-flake-graphite-consolidation-could-alter-global-supply-structure-2014-04-17">graphite rain</a>”, which is significantly impacting local air and water quality. </p>
<p>The production of green technologies creates many interesting contradictions between environmental benefits at the point of use, versus human and environmental costs at the production end. Baoding, a Chinese city southwest of Beijing, has been labelled the <a href="http://www.businessinsider.com/baoding-greenest-carbon-positive-city-in-the-world-2011-6">greenest city in the world</a> or the world’s only carbon-positive city. This is because Boading produces enormous quantities of wind turbines and solar cells for the United States and Europe, and has about 170 alternative energy companies based there. </p>
<p>But last year the air in the city of Baoding was <a href="http://blogs.wsj.com/chinarealtime/2015/02/02/say-hello-to-chinas-new-most-polluted-city-baoding/">declared</a> to be the most polluted in China – a country where air quality <a href="http://www.wsj.com/articles/SB10001424127887324010704578418343148947824">reportedly contributes to 1.2 million deaths each year</a>. These impacts need to be placed into any discussion or policy frameworks when exploring the shift to a “greener” future.</p>
<h2>Beware new problems from new solutions</h2>
<p>We should be excited about the shift to greener cars and affordable home electricity storage units, but in the process of starting to solve the technological challenges of climate change we must ensure that we are not creating environmental problems, particularly for the largely unseen workers and communities further up the production stream. </p>
<p>Our response to climate change needs to be more than just a technological adjustment. <a href="http://www.news.uwa.edu.au/201409256996/research/green-jobs-sustainable-future">We argue</a> that the shift to a green economy requires more transformative social political actions via skills and training, worker participation, and the coming together of environmental organisations, unions, business and government. </p>
<p>Indeed, the world of work is a critical site for emission reductions: 80% of Europe’s carbon emissions are <a href="http://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/@publ/documents/publication/wcms_168163.pdf">workplace-related</a>. </p>
<p>As we adopt emerging greener technologies, we will have to look beyond our shiny new Powerwall, or the electric car parked on the front drive, to ensure that the environmental and social changes promised by green technologies are not just illusions.</p><img src="https://counter.theconversation.com/content/41358/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caleb Goods receives funding from York University and the Canadian Government.</span></em></p><p class="fine-print"><em><span>Carla Lipsig-Mumme receives research funding for the Canadian Social Sciences and Humanities Research Council (SSHRC).</span></em></p>
The advent of battery storage heralds an even deeper embrace of electric cars and renewable energy. But amid the green tech revolution, we should be wary of creating new pollution problems.
Caleb Goods, Postdoctoral research fellow, York University, Canada
Carla Lipsig-Mummé, Professor of Work and Labour Studies, York University, Canada
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/41995
2015-05-20T05:07:32Z
2015-05-20T05:07:32Z
Elon Musk biography portrays a brutal character driven by lofty dreams
<figure><img src="https://images.theconversation.com/files/82267/original/image-20150519-30575-129wcls.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">You WILL build the world's fastest electric car for me.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/oninnovation/4334237247/">OnInnovation/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>There’s this guy that’s pretty sure the thing you’re looking at right now is one of the greatest threats to humanity. No, he’s not talking about our growing obsession with staring at sheets of digitised glass, and the unhealthy sedentary existence associated with doing so. He’s talking about the thing living inside the machine humming quietly behind that glass: artificial intelligence. </p>
<p>It turns out that Elon Musk, one of the world’s most successful entrepreneurs, is plagued with <a href="http://waitbutwhy.com/2015/01/artificial-intelligence-revolution-2.html">existential worries</a>. His new biography, <a href="http://www.amazon.co.uk/Elon-Musk-SpaceX-Fantastic-Future/dp/0062301233">Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future</a>, reveals the billionaire engineer is seriously concerned about the rise of technology so intelligent it could destroy the human race in an effort to protect itself. Why should we listen to him? Well, when it comes to the future, he – more than anyone – is making it happen.</p>
<p>With his company Tesla, he’s transforming the automotive industry by producing the <a href="http://www.treehugger.com/cars/consumer-reports-tesla-model-s-best-car-weve-ever-tested-score-99100.html">most compelling</a> range of cars of all time – and they’re electric. With SolarCity, he’s producing the cheapest form of energy in <a href="http://www.treehugger.com/renewable-energy/42-of-50-biggest-us-cities-rooftop-solar-now-cheaper-grid.html">most states</a> of the US, and it’s through solar power. And with SpaceX, he’s building state-of-the-art rockets and spacecraft far cheaper than anyone else, that are about to become an order of magnitude <a href="http://www.rocketeers.co.uk/node/3665">cheaper</a> through partial and full reusability. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/GeIHJ-i7yVk?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">SpaceX reusable rocket landing attempt.</span></figcaption>
</figure>
<p>Why is Musk, who sold his founding stake in PayPal for more than US$150m (£97m), doing this? To increase our chances, to enable the expansion of humanity, to take one of our eggs out of this basket and place it on Mars as soon as possible. A decade ago, the vast majority of serious thinkers laughed these ideas off as ludicrous. Not now.</p>
<p>Musk had a difficult start in South Africa as the unassuming nerd from a broken family. He was a loner during childhood and suffered for years from bullying in the spartan Afrikaner culture he was brought up in. But now the man, sometimes known as General Musk, has risen. He has willed three recently thought impossible companies into existence, almost simultaneously, each now worth on the order of US$10 billion (£6 billion).</p>
<p>In the biography, <a href="http://www.ashleevance.com">Ashlee Vance</a> level-headedly paints an insightful picture of the vehemence that is Musk, his growth into a leader, the personal sacrifice and torture he has chosen to endure, and the arduous development of his companies. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/82268/original/image-20150519-30498-ihakc1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Probably not thinking ‘Where did I leave my lunch?’</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/oninnovation/4334979070/">OnInnovation/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Any worries that the book would be a shallow money-grabbing rehash of a dozen YouTube interviews are swiftly put to bed. Vance battled to get Musk on side and eventually managed to conduct regular interview with the man himself, the people closest to him, and those that were there at pivotal points throughout his life so far.</p>
<p>As someone who started life in similarly difficult circumstances in post-Apartheid South Africa, with a background in aerospace and a strong affinity for the potential of Mars, I have a soft spot for big E. But Vance is not a fan-boy. His words describe a man whose unrelenting drive and genius is harrowing to those around him, who is mentally detached from what most of us pond-life think is normal – and how brutal such a combination makes this modern-day “Messiah-like” character on a personal level.</p>
<p>Musk is <a href="http://uk.businessinsider.com/working-with-elon-musk-tesla-2015-5?r=US">reported to have</a> turned solid engineers into catatonic wrecks after a bad meeting, and built a culture where his employees adore him and fear him at the same time. For me, it is this aspect of Vance’s portrayal is particularly fascinating.</p>
<p>This guy has such lofty and inspiring ambitions for humanity. He has put everything on the line to take us forward as a species. Yet when it comes to dealing with individuals, in Vance’s book his lack of empathy appears to go beyond anything most of us have ever encountered. On the surface, Musk seems personable and easy-going. In Vance’s reality, he puts Spock to shame.</p>
<p>Even at 400 pages, the book could easily have spent another 100 pages delving more into the personal conversations with Musk, exploring his thoughts more deeply and speculating on the inner-workings of his mind. My wife, a psychiatrist, would have a field-day with this guy.</p><img src="https://counter.theconversation.com/content/41995/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ashley Dove-Jay does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Ashlee Vance’s new book is a fascinating portrayal of the personal sacrifices and mental detachment of one of the world’s most successful engineers.
Ashley Dove-Jay, PhD researcher in Aerospace Engineering, University of Bristol
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/41131
2015-05-04T17:47:57Z
2015-05-04T17:47:57Z
Has Tesla cracked the grid energy storage problem?
<figure><img src="https://images.theconversation.com/files/80173/original/image-20150503-23887-1vhq8ke.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Fancy a home battery with your battery-powered car? </span> <span class="attribution"><a class="source" href="http://www.teslamotors.com/powerwall">Tesla Motors</a></span></figcaption></figure><p>Has Tesla finally done it? Has it finally plucked out the long-standing thorn in the side of renewable energy – the need for cost-effective ways to store electricity? With the announcement of the Powerwall storage system, Elon Musk & Co would certainly like us to think that they have.</p>
<p>There is a lot to admire about the Powerwall, at least as it was first <a href="https://vimeo.com/126695958">presented</a>. It’s small, sleek and clearly designed with aesthetics in mind, not unlike the game-changing hardware produced by that <em>other</em> hot California technology company. </p>
<p>This is not my father’s propane backup generator, which sits in a big box a hundred feet from his house. It is definitely not the diesel generator we had when I was a kid, which looked like (and basically was) a mutant lawnmower engine. </p>
<p>Tesla said the price for the batteries alone is a few thousand dollars but the total is substantially higher when installation and an inverter to make household AC power out of battery DC power are included. Partner SolarCity <a href="http://www.bloomberg.com/news/articles/2015-05-01/solarcity-taking-orders-for-tesla-batteries-starting-at-5-000">said</a> it will sell the battery pack for $7,410 or lease it over nine years for $5,000.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=529&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=529&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80174/original/image-20150503-23856-1gzpiqo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=529&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A two pack of Tesla home batteries.</span>
<span class="attribution"><a class="source" href="http://www.teslamotors.com/powerwall">Tesla Motors</a></span>
</figcaption>
</figure>
<p>To add to the excitement, one utility, Green Mountain Power in Vermont, announced it would be happy to sell the <a href="http://geekmountainstate.com/2015/05/01/green-mountain-power-to-offer-tesla-home-battery/">Powerwall directly to its customers</a>. This is a sign not only that utilities are taking the potential of the Powerwall seriously, but that they may be trying to figure out a way to profit from <a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">potentially disruptive technologies</a>. (Full disclosure: Green Mountain Power has funded some of my university research in the past.)</p>
<p>But for all the buzz around Powerwall, home batteries – even sleek, more-affordable ones – face some hurdles. Unlike a shiny new iPad or iPhone, batteries are still a long way from becoming the next must-have consumer item.</p>
<h2>Who will bite first</h2>
<p>The Powerwall is most likely going to see its biggest initial domestic sales in the same markets that other energy storage companies are targeting – Hawaii, California, New York City and military bases. California is currently a hot market for energy storage because of how the state has chosen to subsidize energy storage technologies. Tesla has already been a big beneficiary.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/80175/original/image-20150503-23877-gvz5t6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tesla batteries: not your father’s basement generator.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dvanzuijlekom/11340173456/in/photolist-ih6mu1-7k5zrL-hjF3Rx-ji9tqo-dZhzkg-di2zCs-5sU6Z-5S8zNE-bymxJM-5mhBKx-5mmWxj-5mmYtf-5mmSEA-5mhHyg-fSWPYk-5mhFBM-5mmUAd-yL73j-91QwBD-emhYPi-88fcF1-zHqi9-e4kwFj-nTniML-7oiwxu-9yUywN-hokLfQ-dMWxZ5-e38KjV-7HbXY4-obfodE-84f7VU-3HyeSS-7HfSiA-h76nqN-81VLnb-81SBTD-7oiwSQ-7oeEf4-81VLvy-7oeCka-81SBZk-81VLqA-7HfRUY-nUGrS-81VLt5-7oixto-amVAHj-7HfRLU-81SBWt">Dennis van Zuijlekom</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>These subsidies, however, can and do disappear sometimes. As this <a href="http://www.greentechmedia.com/articles/read/how-teslas-energy-storage-play-could-take-flight-or-founder">article</a> reports, California is mulling significant changes to its energy storage subsidy scheme. When they do disappear, so can the value of the technology being subsidized. Just ask the providers of “demand response,” whose revenue streams for peak-time electricity reductions were severely disrupted by a successful court challenge to the pricing system established by <a href="http://www.ferc.gov/industries/electric/indus-act/demand-response.asp">federal regulators</a>. The Supreme Court has <a href="http://www.reuters.com/article/2015/05/04/us-usa-court-electricity-idUSKBN0NP17020150504">agreed to take up this case</a>, but the regulatory uncertainty has already affected business models and the functioning of regional power markets.</p>
<p>To keep prices down, Tesla as well as current and future competitors will have to spend lots of time and money lobbying the state to keep the subsidy system in place.</p>
<p>States with a large difference between peak and off-peak prices, including California again, are also a good potential market for low-cost home energy storage. Charge at night when electricity is cheap and discharge during the day when it’s expensive.</p>
<p>This “energy arbitrage” strategy, however, has never worked for the energy storage industry, and it’s unlikely to work for the Powerwall either. The type of charge/discharge cycle for energy arbitrage would probably affect the long-term health of the battery system, meaning more frequent replacement (Tesla is saying that the Powerwall will have a warranty of ten years, though on what terms we don’t yet know).</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/yKORsrlN-2k?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Tesla Motors CEO Elon Musk pitched the home batteries as a way to cut carbon emissions by storing rooftop solar power.</span></figcaption>
</figure>
<p>With enough battery energy storage following the energy arbitrage model, the cost of grid-produced power during the day would plummet because of lower demand. And the cost of power during the evening would rise due to higher demand for charging. On a pure cost basis, this would eat away at the large price differential that built the energy arbitrage idea in the first place.</p>
<p>Moreover, potential buyers seeking to integrate the Powerwall with solar photovoltaic (PV) systems wouldn’t even follow the energy arbitrage strategy; they would do exactly the opposite, charging from rooftop PV panels during the day and discharging at night. Even in California, the economics of doing this, versus just leaning on the power grid at night, are pretty rotten.</p>
<h2>Paying for backup</h2>
<p>Tesla is also trying to sell the Powerwall as a reasonably priced form of backup power, in case of emergencies on the grid. (Remember Hurricane Sandy, anyone?) While it remains to be seen whether it can compete with other backup generator technologies, this customer segment is, in some sense, just what Tesla needs: high-income households to serve as early adopters because they can afford to place a premium on having electricity service during blackouts.</p>
<p>The Powerwall, for all its novelty, is a reminder of how energy storage is still ripe for maturity and how, as an industry, it is still searching for the right business model.</p>
<p>As <a href="http://cleantechnica.com/2015/03/04/energy-storage-could-reach-cost-holy-grail-within-5-years/">these</a> <a href="http://www.nature.com/nclimate/journal/v5/n4/pdf/nclimate2564.pdf">articles</a> show, the costs of energy storage are falling dramatically, although the “balance of systems” costs, which include the inverter, other equipment and installation, still have a ways to catch up.</p>
<p>Even so, energy storage has got to move beyond simply lowering energy cost to have broad market viability. The fall in the price of computers and smartphones was itself revolutionary because these devices did things that nothing else could. In the developed world where the centralized grid is already present and usually reliable, there are plenty of alternatives to the Powerwall and its competitors.</p>
<hr>
<p><em>This article has been updated with the latest available pricing information. To read more about the changing electric grid, see:</em></p>
<ul>
<li><p><a href="https://theconversation.com/why-rooftop-solar-is-disruptive-to-utilities-and-the-grid-39032">Why rooftop solar is disruptive to utilities – and the grid</a></p></li>
<li><p><a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">Tesla batteries: just the beginning of how technology will transform the electric grid</a></p></li>
</ul><img src="https://counter.theconversation.com/content/41131/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Seth Blumsack has received research funding from the U.S. National Science Foundation, Department of Energy, Environmental Protection Agency, the Commonwealth of Pennsylvania, Ford Foundation, PJM Interconnection, LLC, Green Mountain Power, the Williams Companies and the Marcellus Shale Coalition.
He has performed consulting work for Vermont Energy Investment Corporation, Vermont Electric Cooperative, Environmental Protection Agency, Los Alamos National Laboratory and Department of Energy. He has also appeared as an expert witness on behalf of numerous state public utility commissions.
Dr. Blumsack is currently a visiting researcher at the Santa Fe Institute</span></em></p>
As it’s done with its electric cars, Tesla will need to rely on well-heeled early technology adopters and friendly regulations to sell lots of home batteries.
Seth Blumsack, Associate Professor, Penn State
Licensed as Creative Commons – attribution, no derivatives.
tag:theconversation.com,2011:article/40142
2015-04-30T10:18:18Z
2015-04-30T10:18:18Z
Tesla batteries: just the beginning of how technology will transform the electric grid
<figure><img src="https://images.theconversation.com/files/79845/original/image-20150429-6242-19hz8ne.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Coming to a grid near you.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/scalespeeder/2328220277/in/photolist-4xJJLV-oXm1Q3-oXkTGf-4gsKCV-6M4vnj-oX7rUt-2koaCv-4XiuMd-fjdFVC-f3LfTr-7pHazH-oXmEn7-nXkmR-b3jjdD-hKVPbq-pQdzUM-fDGg4L-5D7NDX-cvvasy-dQyac-arTTuE-ndg9ki-gBVxv-oXnzjc-hNcMN-7hE5UX-oEUhRK-oETiTQ-51dYSX-PSKph-oETe35-9jPc9o-doSi81-5L1Zym-oESPKq-5mNtgG-oETbkJ-8gHhma-cbksLQ-vkXbx-72KZxd-wN6dj-ncQS9R-48evhS-cbkcNs-vjDuV-c1fSuU-5ur2pt-e5Ueyk-wR4xs">Rob Nunn/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Tesla Motors already makes batteries for its electric cars. On Thursday, it’s <a href="http://www.wsj.com/articles/teslas-next-big-idea-storing-power-1430252650">expected</a> to introduce battery systems for homes, businesses and electric utilities. </p>
<p>The spread of cost-effective batteries will fundamentally change the way the electric grid operates. Combined with other innovations, batteries in homes and businesses will transform how people and businesses treat electricity.</p>
<p>Along the way, these batteries will improve the efficiency and reliability of the grid overall. </p>
<h2>The solar factor</h2>
<p>Right now, most power is generated at large power plants and distributed to consumers. Electric energy storage allows a two-way flow of power, which offers some significant advantages for support of the power grid. For example, storage is particularly useful for offsetting the intermittent nature of wind and solar photovoltaics, which don’t produce power on demand as a fossil fuel power plant does.</p>
<p>For an individual consumer, having a battery behind the meter provides a great deal of flexibility in managing energy use. Batteries allow consumers to cut their electric bills by reducing how much power they consume during peak hours when power costs more, which is the case in many states such as California. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=1042&fit=crop&dpr=1 600w, https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=1042&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=1042&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1309&fit=crop&dpr=1 754w, https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1309&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/79844/original/image-20150429-6242-hv9zwa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1309&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Solar installer SolarCity has been testing battery systems made by Tesla.</span>
<span class="attribution"><a class="source" href="http://www.solarcity.com/residential/energy-storage">SolarCity</a></span>
</figcaption>
</figure>
<p>Homes with rooftop solar panels and batteries can actually use energy from their solar systems during power outages and, with a modest amount of storage, have sufficient power to last for days if the grid is out. And with enough storage, they can disconnect from the grid indefinitely – a development <a href="https://theconversation.com/why-rooftop-solar-is-disruptive-to-utilities-and-the-grid-39032">utilities fear</a>. </p>
<p>A number of states have <a href="http://www.seia.org/policy/distributed-solar/net-metering">net metering</a>, programs in which utilities purchase the excess electricity from solar panels that’s fed into the grid. In combination with net metering, behind-the-meter storage creates the opportunity for customers to buy power from the grid when prices are low and then sell stored energy from batteries when prices are high. This practice, known as arbitrage, has led to <a href="http://www.greentechmedia.com/articles/read/solarcity-to-ca-utilities-no-more-batteries-until-grid-opens-up">concerns at utilities which have levied large additional charges</a> for equipment installations in some places.</p>
<p>Commercial and industrial customers stand to benefit from behind-the-meter storage as well. They can reduce their usage during times of peak demand and cut so-called <a href="https://www.northwesternenergy.com/docs/default-source/documents/E-Programs/E-demandcharges.pdf">demand charges</a> – fees for maximum power usage – that can dominate how much they pay for energy.</p>
<h2>Batteries with wheels</h2>
<p>From the perspective of the power grid, electric vehicles (EVs) can in many respects be considered a variation of behind-the-meter storage – they just happen to be mobile. </p>
<p>EV batteries can hold a significant amount of energy. The Nissan Leaf, for example, holds 24 kilowatt-hours, while an average house will use <a href="http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3">30 kilowatt-hours per day</a>, so a car battery could provide backup power during an outage. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=281&fit=crop&dpr=1 600w, https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=281&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=281&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=353&fit=crop&dpr=1 754w, https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=353&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/79842/original/image-20150429-6236-ihh0aq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=353&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">An artist rendition of Tesla’s ‘gigafactory’ now under construction in Nevada which will make batteries for electric cars and stationary energy storage.</span>
<span class="attribution"><a class="source" href="http://www.teslamotors.com/gigafactory">Tesla Motors</a></span>
</figcaption>
</figure>
<p>But electric cars create challenges for grid operators. Because they draw so much current during charging, there is the potential to overload circuits that serve neighborhoods. In order to mitigate this and avoid the cost of upgrading the infrastructure, some utilities offer, or require, special tariffs that reward EV charging at night when energy demand and prices are low. </p>
<p>By charging when the power use is low, EVs can help flatten the typical load curve of the grid and draw power at off-peak hours at night. </p>
<p>Since EVs are pulling power off the grid, they can also offset excess power production from wind in particular, which often generates more power than can be used late at night. That can help generators avoid the <a href="http://www.eia.gov/todayinenergy/detail.cfm?id=16831">negative pricing</a> – when excess power reduces the real-time price of power to less than zero – sometimes associated with excessive wind generation conditions. </p>
<p>Meanwhile, EVs can address the decreasing power sales utilities have been experiencing by adding what is a essentially another power-hungry appliance to their monthly bills.</p>
<p>Close on the horizon is so-called vehicle to grid (V2G) technology. Standards will finally make it possible to use the EV battery in two-way operation with utilities. The University of Delaware, for example, has experimented with ways to connect <a href="http://www.udel.edu/V2G/">parked EVs to the electric grid</a>. When grid operators need a short burst of power or have excess power, they push power back and forth into the EVs’ batteries. Owners could be paid for these services. </p>
<h2>Peak shaving</h2>
<p>A real game changer, however, would be if utilities could manage the behind-the-meter storage with another technology known as demand response – or cutting power use at key times during the day. </p>
<p>Utilities used to make deals with large energy users, such as factories, and call them on the phone to cut power use during peak power days. For example, in the middle of a hot summer day when the load from air conditioning is high, grid operators struggle to meet the demand. Cutting power during those peak hours gives them more capacity to avoid brownouts. And in exchange for agreeing to reduce power on peak days, customers get some sort of payment.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=471&fit=crop&dpr=1 600w, https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=471&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=471&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=591&fit=crop&dpr=1 754w, https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=591&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/79847/original/image-20150429-6258-kawjbl.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=591&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Demand response lowers power use during peak hours of the typical daily ‘load curve.’</span>
<span class="attribution"><a class="source" href="http://www.eia.gov/todayinenergy/detail.cfm?id=130">US Energy Information Administration</a></span>
</figcaption>
</figure>
<p>The phone calls of old evolved into automated systems. And eventually, in deregulated markets, businesses formed that collect the demand response commitments from multiple large energy users. Then they sell that capacity to reduce power when needed on the daily energy markets. This has been an effective method for reducing dependence on the polluting and expensive generators that only run for those few weeks of peak needs. </p>
<h2>The power of connected storage</h2>
<p>More recently utilities – particularly those with hourly pricing plans such as ComEd in Illinois and Austin Energy in Texas – have begun experimenting with demand response in the residential market. </p>
<p>Smart thermostat maker Nest uses its internet-connected thermostat to respond to demand response requests on peak demand days. Customers can respond to a day-ahead phone notification by choosing to opt out of the event or they can simply adjust the thermostat to opt out after the utility has given the signal. </p>
<p>Some more recent demand response experiments involve hour-ahead notification. So far these experiments have mostly dealt with adjusting thermostats to reduce loads, but appliances are now being sold with the ability to use real-time pricing for operating decisions. </p>
<p>What if the behind-the-meter storage could be dispatched by demand response signals? If utilities could draw on the energy stored in behind-the-meter batteries and EVs, it could have a range of benefits. The connected storage could lower power costs by eliminating some peak generation needs and provide a buffer for variable wind and solar power. </p>
<p>For the consumer, energy storage enables a whole new way to look at home electricity use. It can provide energy security, lower energy costs and eventually offer an opportunity to become part of the market for buying and selling power. </p>
<hr>
<p><em>To read more about the changing electric grid, see <a href="https://theconversation.com/why-rooftop-solar-is-disruptive-to-utilities-and-the-grid-39032">Why rooftop solar is disruptive to utilities – and the grid</a>.</em></p><img src="https://counter.theconversation.com/content/40142/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael McElfresh does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>
Batteries combined with digital technologies will improve the efficiency and reliability of the electric grid, transforming how people use their energy.
Michael McElfresh, Adjunct Professor of Electrical Engineering, Santa Clara University
Licensed as Creative Commons – attribution, no derivatives.