Tesla Targets Home Energy Storage

Tesla Motors took another big step into the battery market last night, officially unveiling a strategy that would enable it to sell batteries into home and grid storage applications.

In a grand announcement at Tesla Design Studio in Hawthorne, Calif. (watch it here), CEO Elon Musk said the company plans to use lithium-ion battery modules from its proposed Gigafactory to make "storage appliances" that could be mounted on the wall of a garage or near a home's electrical panel. The automaker also plans to sell bigger assemblies into commercial and utility applications.

Musk told the audience at the event that the announcement is part of Tesla's effort to accelerate society's move away from fossil fuels. "This is within the power of humanity to do," he said. "We have done things like this before. It is not impossible."

The focal point of the event was Tesla's home battery, called the Powerwall. Measuring about 34 inch x 51 inch x 7 inch deep, the lithium-ion-based Powerwall is designed to be installed on a garage wall. It comes in 10-kWh and 7-kWh daily models, which can be installed by themselves or together, in homes with greater energy needs. The 10-kWh version will cost $3,500, while the 7-kWh version will come in at $3,000.

The home storage strategy serves as an important piece of the puzzle in Tesla's efforts to sell electric automobiles. Today, the lynchpin of Tesla's low-cost EV strategy is the creation of its massive Gigafactory, designed to enable the company to drive down the costs of lithium-ion battery packs through huge economies of scale. Tesla has said the Gigafactory will produce 35 GWh of battery capacity annually -- about five times the amount produced worldwide today. By using batteries from the Gigafactory, the home storage effort would help boost production volumes and thereby drive down costs for the automotive side. "We think Tesla will be able to sell about 17 GWh of batteries in 2020 -- about half of its total capacity," Dean Frankel, industry analyst at Lux Research, told Design News. "But the pathway to go from 50% capacity to 100% is doable."

One key to the strategy's success may lie in the electric utilities' acceptance of it. "The utility's role is really important for maintaining growth in this market," Frankel told us. "If it becomes a foe of this battery project, it will limit the addressable market. And right now, the utilities are not very forward-thinking about two-way power flows."

In a statement, Tesla said it also plans to sell bigger battery blocks into commercial and utility applications. The 100-kWh blocks could be grouped to create larger systems offering 500 kWh to 10 MWh for applications needing two to four hours net discharge power.

Tesla isn't alone in its grid storage strategy. MIT-spinoff Ambri announced in 2011 that it is building a high-temperature liquid-metal battery aimed at home and grid storage. Ambri, funded in part by Bill Gates, stacks its liquid-metal cells, each about the size of a pizza box, to create batteries with storage capacities of as much as 1.2 MWh. Similarly, A123 Systems , Saft, and Prudent Energy, among others, have all proposed grid storage systems.

MORE FROM DESIGN NEWS: Battery Makers Roll Out Grid Storage

Experts say that grid and home power storage provide the key to success for renewable forms of energy, such as wind and solar. By moving toward battery-based storage, Tesla believes it could ultimately wean the world off fossil fuels. "Once we're able to rely on renewable energy sources for our power consumption, the top 50% of the dirtiest power generation resources could retire early," the company said in a prepared statement. "We could have a cleaner, smaller, and more resilient energy grid."

Senior technical editor Chuck Murray has been writing about technology for 31 years. He joined Design News in 1987, and has covered electronics, automation, fluid power, and autos.

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