Tesla's battery activity is booming as Model 3 struggles

Over the past year, Tesla's observers have been obsessed with Palo Alto's automaker's difficulties in constructing erratic behavior of its Model 3 electric sedan and CEO, Elon Musk, who recently appeared to be smoking pot on a podcast.

Quietly, another element of Tesla's business is booming.

The deployment of Tesla stationary batteries – designed to provide electricity to homes, businesses or the power grid – has increased by 450 percent in the first half of 2018, according to the company.

Tesla has now installed enough batteries around the world – from Australia to Vermont – to store 1 gigawatt-hour of electricity, or roughly the output of a commercial nuclear reactor that runs for one hour. The company plans to double this amount over the next nine to twelve months.

Despite this, some homeowners complained that the company – little known for the production lead times – had postponed the installation deadlines even in 2019. On the Tesla Motors Club, a non-online discussion forum sponsored by a participant wait 18 months after depositing a deposit of $ 500.

"The sad truth is that we give all of our $ 500 to Tesla for more than a year (some are closing at 2 years old), and we are not interested in" lending "to Tesla! " The KC_moses handle of Lake Worth, Florida. "The more I look at her, the more I hate Tesla.

The production of model 3 can be an obstacle. The car, considered the backbone of Tesla's plans to become a mass-market automaker, has engulfed the lithium-ion battery cells manufactured by Nevada Gigafactory.

"We're kind of devoid of Powerwall cells right now," Musk acknowledged in a conference call with financial analysts in July, referring to Tesla's battery brand name.

The company's website now warns prospective purchasers of the $ 5,900 Powerwall that new orders will not be filled before "end 2018" at the earliest.

Tesla's technical director, J.B. Straubel, said battery production is expected to catch up next year.

"The residential market is going crazy, and the demand is stronger than we can bear right now," he said. "We are increasing production as quickly as possible and there are still delays."

At the same time, Tesla is aggressively courting utilities interested in major battery installations.

In June, she won a contract with Pacific Gas and Electric Co. to install enough Powerpack industrial batteries in Moss Landing, Monterey County to store 730 megawatt hours of electricity. And in May, Tesla announced an agreement with Green Mountain Energy in Vermont to use Powerpack installations and up to 2,000 home powerwalls to create a sort of power plant, connecting the batteries and supplying them with electricity if needed. .

Utilities see the potential of batteries to replace "inefficient" plants – facilities that generate electricity only when the demand for electricity on the grid is highest. This is especially true in California, which is trying to reduce greenhouse gas emissions from burning fossil fuels.

"I think what we will see is that we will not be building a lot of new high-tech plants, if at all," said Straubel. "What we're seeing is that the number of new releases is significantly reduced and that batteries are already competing with the state-of-the-art natural gas plants."

The potential market is huge. A study by GTM Research estimates that sales of energy storage products in the United States – including residential and utility markets – will reach $ 541 million this year, reach $ 1 billion in 2019 and 4 , $ 6 billion in 2023.

Other countries are showing interest. Although North America accounts for about 30% of the global energy storage market, according to Navigant Research, facilities are expanding in Asia, particularly in South Korea and Japan.

"These two countries do not have their own fossil fuel businesses," said Alex Eller, senior analyst at Navigant Research. "So you reduce the amount you rely on these imported fuels."

Tesla faces fierce competition from companies such as NextEra Energy, E.on of Germany and Fluence, a new joint venture of Siemens and AES Corp. Most of them use similar lithium-ion battery cells, Eller said.

"I would say that the material side is definitely trivialized," he said.

Companies are more differentiated by their software that exploits the batteries. After all, batteries can be used for a number of services requiring different operations, from storage of solar energy to stabilizing the network.

"The transfer of solar energy could be relatively simple, but some projects could provide a number of services," Eller said. "So the software is really going to be the key."

The residential market, on the other hand, is largely motivated by homeowners' desire to make the most of their rooftop solar panels.

Stanford University professor Mark Jacobson uses two Powerwalls – operating since June 2017 – to store electricity from a 13.6-kilowatt solar generator installed on his campus. Batteries are usually charged before 10 or 11 o'clock, he said. After that, any excess electricity generated by the panels is fed back into the network.

In the evening, Jacobson uses the batteries to power his home, which contains only electrical appliances – no natural gas. The house draws electricity from the network between 23 hours. and in the morning. Since he is compensated for the electricity he exports to the grid during the day, he can deduct his utility bill.

Although the roof battery and batteries cost more than $ 60,000 in advance, before state and federal incentives are taken into account, Jacobson estimates he will recover the money in five years. Oh, and he drives a Tesla Model S. electric

"Once you understand, it's stupid not to do it," said Jacobson, who modeled how California can derive all its energy from renewable sources. "I do not have an electricity bill, I do not have a gas bill, I do not have a gas bill."

Tesla does not reveal exactly how much of his batteries he is doing.

Instead, the company raised revenue through its solar business, formerly known as SolarCity. In the first half of 2018, combined sales reached $ 784.4 million, up 56.7% over the first two quarters of last year. Tesla's solar installations have slowed over the past year, which means that the revenue growth of the company's energy division comes from batteries.

Growth has not been easy. Tesla battery deployments dropped 45.6% from the first to the second quarter of this year. The first quarter total was partially inflated by the completion of a major project in South Australia. But the company's decision to prioritize the production of Model 3 probably played a role.

In its latest quarterly shareholder update, Tesla recognized the battery backlog, stating that "demand for our energy storage products remains well above our production rate, although we are gradually adding the capacity".

Straubel considers that the residential energy storage market is growing as fast as utilities. The company does not disclose the percentage of its battery installations to residential customers in relation to utilities.

He stated that rumors that the company had stopped manufacturing or installing Powerwalls were not true.

"We are definitely building Powerwalls and deploying them," said Straubel.