Feeds

Who will kill power companies? TESLA, says Morgan Stanley

GigaFactory batteries an existential threat to utilities

Internet Security Threat Report 2014

With Tesla and Panasonic prepping the giant erection called the GigaFactory, Morgan Stanley has penned an investor note predicting that Elon Musk's big battery footprint will become a major disruptor to power utilities.

It's hardly disinterested, since the financiers were underwriters for a Tesla fundraising round in the past, but it remains an interesting notion: could Tesla also flog batteries to punters wanting storage for their off-grid solar kit, and if so, how would that impact the electricity generation, distribution and retail market.

According (PDF) to Morgan Stanley, it would be a major disruptor.

Already, in countries with high renewable penetration, energy market analysts talk of a solar “death spiral”: solar cuts utility consumption, so to cover their high fixed costs, utilities raise their rates, sending more consumers to install rooftop solar.

Most of those consumers retain a grid connection for overnight power (and for dull days), but it's the cost of storage that puts them off: enough banks of batteries to keep a home powered overnight or through a string of sunless days can easily pass US$10,000.

Hence the speculation from Morgan Stanley: “We believe Tesla’s energy storage product will be economically viable in parts of the US and Europe, and at a fraction of the cost of current storage alternatives”, the note writes – and if that “fraction” is small enough, it's bad news for utilities.

For example, in the US, the note predicts 40 GW of new solar PV installations between now and 2020 – and those customers might decide that off-grid is the way to go.

“We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost reduction magnitude that Tesla might be able to achieve once the company has constructed its 'Gigafactory'”, the note states.

Musk-driven battery savings will go hand-in-hand with new models for installation – such as SunEdison's finance-design-install offerings that are being replicated around the world – to encourage take-up.

So what does Morgan Stanley have to say about the cost of storage if Tesla decided to enter the PV market?

“Tesla will produce as many cells from its GigaFactory as are currently produced by all worldwide battery manufacturers combined”, the note states. “We project the capital cost of Tesla’s battery will fall from the current $250/kWh to $150/kWh by 2020, whereas its closest competitor will be at a cost of ~$500/kWh.”

At $250/kWh, 35 kWh of storage – a starting point for household storage if there's also a generator – would come in at under $9,000. Taking that down towards $5,000 for storage becomes a serious danger to utilities.

“This can result in a 'tipping point' that creates ever greater incentives for customers to adopt solar, thus leaving utilities with the potential long-term issue of losing a significant portion of their customer base”, the note states. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Apple SILENCES Bose, YANKS headphones from stores
The, er, Beats go on after noise-cancelling spat
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
America's super-secret X-37B plane returns to Earth after nearly TWO YEARS aloft
674 days in space for US Air Force's mystery orbital vehicle
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.