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Tesla's expected home battery announcement could spark energy revolution

04/30/2015 12:14 EDT | Updated 08/07/2015 07:59 EDT
The man behind the electric car revolution is expected to unveil a large-scale battery capable of powering an entire house, during an announcement at Tesla Motors headquarters in Hawthorne, Calif.

While the battery will likely slash power bills for consumers, some say it's also a move toward democratizing energy systems.

Elon Musk, CEO of Tesla Motors, teased the announcement on Twitter a month ago, saying a major new Tesla product line will be unveiled at Hawthorne Design Studio at 8 p.m. local time Thursday. "Not a car," he wrote, sparking speculation that it may be a home battery.

Musk, who moved to Canada from South Africa and who briefly studied at Queen's University in Kingston, Ont., before transferring to the University of Pennsylvania, is also chairman of SolarCity, a solar power provider.

SolarCity has already ran a pilot program where they installed 300 home batteries made by Tesla in California homes. Another 130 systems were being installed in early 2015, according to the company's website.

The product will be available again in late summer, the company says, as its working on "the next phase" of the program.

Tesla is also in the midst of building its gigafactory, which has added to the speculation that the company is unveiling a home battery. Musk says that by 2020, the factory will produce more lithium ion batteries than all the current factories producing that product today. 

A home battery attaches to a home's electrical system and collects energy gathered by solar panels when the sun is out, Michael Ramsey, a Wall Street Journal automotive reporter, told CBC's The Current. That energy can then be used when the sun is no longer out, like during the evening.

"The idea is that you purchase this system and it allows you effectively to cut the cord," he says of a consumer's ability to no longer rely as heavily on energy from the grid. The consumer's electricity bills would be significantly reduced because they would be paying for less electricity from the grid.

This innovation could move the world toward a future where power is generated where we need it and where we use it, says Warren Mabee, director of the Queen's Institute for Energy and Environmental Policy.

"This is this shift away from very large centrally operated plants towards everybody owning their own little power grid or part of a small power grid in a condo building," Mabee says.

In this system, centralized power generation becomes more of a backup than a driver, he says.

Costs remain high

However, the current systems are still very expensive, says Ramsey. The 300 home batteries installed in California cost upwards of $20,000, he says.

"It would take years, and years and years to cover the utility costs," he says. "It doesn't make sense unless the costs come down."

Ramsey views businesses as having the highest possible economic advantage from this development. The battery could offer businesses a surge of electricity when they have a high demand for power and cut their bills.

Mabee compares the cost of solar panels to cell phones. Smartphones were once incredibly expensive, but each new generation has brought the cost down, he said.

Each year, solar panels become better and cheaper. Solar panels are getting close to their grid parity moment — a magical number that describes when the cost of generating solar power is the same or cheaper than buying energy off the grid.

Another grid parity moment may be close, says Mabee. It won't be long before the cost of a solar panel and battery system will match the cost of purchasing electricity from the grid, he estimates.

"That magic grid parity moment is coming faster and faster," he said.

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