Is Tesla Motors Inc (TSLA) and SolarCity Corp (SCTY) Partnership The Dealth Of Utility Companies?

Tesla Motor (TSLA)

Tesla Motors Inc (NASDAQ: TSLA) has invested $5 billion to build a battery factory in Nevada. The facility is expected to create 6500 new jobs, produce 50 gigawatts of battery storage and provide power to 500 000 electric cars per year.

Tesla Motors Inc (NASDAQ: TSLA) is working with SolarCity Corp (NASDAQ:SCTY) on the new project. It is expected that the project will make electric cars more affordable. In addition, the battery packs being manufactured could be installed in homes reducing consumer’s dependence of electricity from the grid.

Tesla Motors Inc (NASDAQ: TSLA) founder Elon Musk believes they can make batteries small enough to fit in an average home. These can then are connected to rooftop solar panels and provide power to homes enough for a whole day.

Tesla Motor (TSLA)

This is good news to anyone burdened by the cost of fueling a car and the bills from electricity providers. Plus, this will promote the reduction of carbon emission as the calls for renewable energy intensify.

But in the long term, this would prove detrimental to their survival of utility companies. If customers adopt the solar energies and batteries from Tesla Motors Inc (NASDAQ: TSLA), then they will rely less on utility companies for power.

In Australia for example, consumers are abandoning the traditional system in favor of solar power. Predictions indicate that in 10 years, 75% to 90% of homes could be powered by solar energy in that country.

Musk and SolarCity Corp (NASDAQ:SCTY) CEO Lyndon Rive jointly said this does not spell the end of the utility companies. Their prediction is that 65% of energy will come from solar power and the remainder will be provided by the utility companies.

 Ellen Hayes of PG&E said,

“The electric grid will be just as important in the years to come because the grid is becoming the platform that makes it possible for people to plug in solar panels, batteries and charging stations. Having a solar panel that isn’t connected to the grid is like having a computer that’s not connected to the Internet.”

This article has been written by Amna El Tawil.

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3 Comments

  1. Ron Winton said:

    This death of the utility companies may sound destined to become reality on the surface but there’s several flies in the ointment that will probably put an end to the plan in short order.Or at the very least, will delay it’s implementation for many years to come.

    1. Cost, Li-ion battery technology is far too expensive today for use in solar storage systems. Even low cost lead acid battery tech can’t be made to pencil out in storage applications when considering the low cost of utility supplied power. The only reasons why a small number of Li-ion systems have been installed in California is because of California’s huge limited time cash rebate for advanced storage systems which effectively pays for the battery pack. If it wasn’t for this rebate, these system would have never been installed in CA. These rebates will soon run out.

    2. Do you believe for even a moment that the utility companies are simply going to lie down and allow their business model to be destroyed? Simply look toward Arizona and Florida and Wisconsin for that answer. One by one, the utilities are fighting back against the solar leasing companies and they’re winning. In Arizona, SRP’s new $50-$100 per month fee will effectively kill solar for much of the state. And with may solar leases and PPAs containing a 2.9% to 3.9% annual payment increase, all the utilities would have to do is freeze rates for a couple of years and homeowners with leased systems could end up paying more for their electricity than if they never signed a solar lease agreement to begin with, leasing to a collapse of the $0 down solar leasing market.

    3. Then there is the issue of safety while using potentially volatile Li-ion battery technology in residential applications. All you have to do is look toward the recent Boeing 787 Dreamliner fire that involved Li-ion batteries. What will happen to your homeowners insurance if you install a Lithium battery pack in your home. What would happen to your home, should a single cell go into thermal runaway causing the rest of the cells in the battery pack to melt down causing a hard to extinguish electrochemical fire ?

    4. Then there’s the competition. Already, far safer far longer lived Vanadium Redox storage technology has been developed for both industrial and residential use. And it cost less than Lithium. And then there’s solid state battery technology that again is far safer and is expected to cost less as well.

    Personally, I think the death of the utilities is a bit premature to say the least.

    • Sean said:

      Yeah man, kind of like how everyone said in the 80’s, “Who would buy a PC? What a ridiculous idea, to believe that someone would want a tiny computing machine that does a fraction of what the big mainframes can do.” Today, the computer in my pocket is a billion times more powerful than the first computers Bill Gates, James Gosling, and Bill Joy fell in love with back in the early years. Solar technology is going to surpass fossil fuel efficiency many times over. There will be a day in the not so distant future when charging your cell phone happens instantaneously, or it will never lose power. Battery technology is just now being explored because companies like Tesla and Solar City are causing so much disruption that their value is undeniable. Elon Musk has reiterated many times that his goal with his companies is not to make ridiculous profits, it’s simply to force society to embrace the future. How do utility companies produce electricity? By using old technology and old methods that have been outdated for several decades. Fission reactor that use uranium as their fuel are only 2% efficient and this fuel is very rare(expensive). There’s a movement across the world to use Thorium reactors because it’s safer, more efficient, and cheaper. (Win, win, win) Utility companies have to go out of business, just like stores that sell books and records(nostalgic), at least at an enterprise level, because technology will simply out grow them and no one wants to pay a bill for no reason when there is a mainstream alternative readily available. Plus, the use of fossil fuels for transportation and grid power MUST go down in order for our planet to survive, climate change is undeniable. The oil industry will be fine, we still need plenty of plastic and gas stations make very little profit, if at all, on fuel sales anyway so replacing their pumps with battery changing stations is a blessing. And, as vehicle technology advances, these stations can introduce more automated services like tire balancing and engine diagnostics during your stop to replace your battery.

      All this said, your fourth point completely unravels your argument. You’re admitting that more efficient technology is going to replace our current systems. Why a consumer buy electricity from the grid if they can produce more than they’ll ever need from the solar? What happens when a solid state battery become so small and efficient that one the size of your laptop will hold enough energy to power a car for 300+ miles. Put ten of them in a Tesla, along with smaller, more efficient solar tech and now you have a car that never needs to connect to ANYTHING for power.

      “When Henry Ford decided to produce his famous V-8 motor, he chose to build an engine with the entire eight cylinders cast in one block, and instructed his engineers to produce a design for the engine. The design was placed on paper, but the engineers agreed, to a man, that it was simply impossible to cast an eight-cylinder engine-block in one piece.

      Ford replied,”Produce it anyway.” And they did, because anything is possible.

      • Ron Winton said:

        You must be confused. Solar will triumph over the utility companies, that I can guaranty you. And new, far more advantages (performance and economical) battery technology will rule the the storage industry, I just don’t believe that it will be Tesla or SolarCity that will lead the charge.

        In my opinion, their time has come and gone and it’s now time for the real innovators to step in and take over where they left off. While I am grateful for their contributions thus far, their contributions are only the beginning. Technology stands still for no one.

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