Will Tesla be a Game-Changer for Battery Energy Storage?

March 17, 2014 | 11:38 am
Laura Wisland
Former Contributor

Last week Tesla, an electric car manufacturer based in Palo Alto, made national news by announcing it intends to launch a “Gigafactory” to produce lithium-ion batteries for at least 500,000 vehicles by 2020. This is no small potatoes. The level of battery production Tesla envisions is equivalent to the lithium ion batteries produced worldwide last year.

Tesla expects that such production will lower the cost of these batteries by 30 percent. The ability to make cost-effective and durable batteries is critical for widespread adoption of electric vehicles. (For more on Tesla’s announcement, check out Rachael Nealer’s blog which contains advice on how Tesla can get the most from its investment.)

Lithium ion battery installation. Source: David Dodge, Green Energy Futures

Lithium ion battery installation. Source: David Dodge, Green Energy Futures

The potential role of storage in a clean energy future

Storage could also play a significant role in helping the electricity grid absorb large amounts of renewables and capture clean energy for use when the sun isn’t shining and the wind isn’t blowing.

While batteries and other advanced energy storage devices like flywheels have been installed on the electricity grid at a relatively small scale in New York and the mid-Atlantic region, they need large payments to cover costs and are not yet competitive with other energy technologies that provide grid flexibility.

Realizing the potential role of storage in a clean energy future, California was the first state in the country to roll out a storage purchase mandate (1.3 gigawatts by 2020) to grow the market and reduce prices through economies of scale. California’s storage policy is widely acknowledged as a good start rather than an end point regarding the amount of storage we should consider investing in to turn off fossil fuels once and for all.

Will Elon Musk revolutionize the storage market the way that Henry Ford transformed the auto industry? It’s too early to tell, but I say keep reaching for the stars.