Elon Musk’s bet that he can sell 50,000 versions of the Model 3, the $35,000 version of the Tesla, due out in 2017, still seems like a long shot, given the somewhat limited market for electric cars.
But he might have one more card up his sleeve. The development of solar energy for home use offers an alternative market for his batteries that could be enough to save Tesla from a market collapse.
Musk is unveiling a new home storage unit that will allow homeowners to move their electrical consumption from expensive peak rates to the rock-bottom rates of overnight power. If nothing else, this will create a secondary market for the millions of lithium-ion batteries that Tesla will be cranking out from its $5 billion Gigafactory in Nevada, which is scheduled to be operational in 2017.
Early indications are that the demand for batteries to power the mid-priced roadster might be thinner than anticipated. Musk was counting on big demand from China, and already there are indications that it’s a much tougher market than he realized. As reported here last week, China already has 100 manufacturers turning out 400,000 undersized vehicles a year that can reach 48 miles an hour. They certainly wouldn’t sell in the United States, but for a million Chinese, it’s just what they need to putter around their small villages and cities. China also has 90 million electric scooters on the road and 120 million electric bicycles — an entire electric-vehicle market that doesn’t exist in this country. Making a dent in this market with a $35,000 scaled-down version of a luxury vehicle is not going to be easy, which is why Musk cut his China effort in half only a few weeks ago.
But there’s an out here in the burgeoning market for home electric storage that is taking shape in the United States, particularly in California. The Golden State has established a goal of getting 33 percent of its electricity from renewable resources by 2020, and 50 percent by 2030. Now powering with renewables isn’t just a matter of putting up solar collectors and windmills. You have to store that electricity for a time when it’s needed. Otherwise, most of it is wasted. And that’s where Musk’s plan to power electric vehicles with large complements of relatively small lithium-ion batteries enters in, because such a system also will be ideal for storing electricity in household-sized units.
Without any fanfare, Tesla already has installed such a system in more than 100 homes in California. It also has a deal with Walmart to install it on a commercial scale. “Tesla has been able to install more than 100 projects, really without anyone noticing,” Andrea James, a Dougherty & Co. analyst, told Bloomberg. She also estimated that the home-storage business could add $70 to Tesla’s stock, about one-third of its current value.
The effort already has paid off for Tesla in that it has collected $65 million in state incentives under the advanced storage technology portion of California’s Self-Generation Incentive Program (SGIP), which rewards users for coming up with ways of generating their own power. With household units running anywhere from $2,000 to $10,000, they’re going to need plenty of help from the government.
Tesla is not the only company working on battery storage. Bosch, General Electric and Samsung all have experimental systems going. There are also research projects being conducted at Harvard, MIT and other universities.
In Notrees, Texas, Duke Energy Renewables, with the help of the Department of Energy, has built a project that is using thousands of lead-acid batteries to store the electricity from a large wind farm. The lead-acid batteries are more expensive, however, and require frequent repair. Also, Duke has found that there is not as much of a market for their product as it had anticipated, mainly due to the costs. “There was little interest from customers willing to pay for that,” said Greg Wolf, president of Duke Energy Renewables, according to The New York Times. “That has not evolved as much as some folks, including ourselves, thought.”
But there are other opportunities that could enhance Tesla’s overall business model. One is that when lithium-ion batteries begin to lose their power so that they are no longer capable of driving a car, they still remain strong enough to power a home storage system. That could mean there will be a secondary market for Tesla’s car batteries.
Another dream that has always been in the back of people’s minds is that the electric vehicles themselves could serve as storage for utility power, drawing on cheap nighttime power and then reselling it to utilities during the day. This would involve an elaborate infrastructure, however, and this would mean the cars would not be available for a good part of the day if their stored power was being fed to the grid.
Altogether, however, the storage potential of the batteries means that Tesla will have an alternative means of income in addition to the electric cars. This means the company could diversify enough so that it will not depend entirely on the success of the Model 3. In the long run, this might mean that the company can survive long enough to make the electric vehicle a standard item for the American consumer.
Growing concern in California’s Central Valley: Crops raised with oil field water
Until now, government authorities have only required limited testing of recycled irrigation water, checking for naturally occurring toxins such as salts and arsenic, using decades-old monitoring standards. They haven’t screened for the range of chemicals used in modern oil production.
How should we transport oil, by pipeline or rail?
/in Environment, Over a Barrel Blog lhall /by Landon HallThe Obama administration on Friday issued new rules intended to make oil-by-rail safer. But environmental groups rejected the reforms, saying a methodical program to remove aging train cars from service all but guarantees further catastrophic accidents.
The Department of Transportation’s new rules would phase out the DOT-111 rail cars, still in use since the 1960s, by 2018. Newer CPC-1232 cars, which still aren’t perfect, would have to be replaced by 2020 with a new-and-improved DOT-117 model.
According to The New York Times:
Last month DOT issued new standards designed to reduce speeds traveled by oil trains in residential areas.
A coalition of activist groups, including the Sierra Club and the NRDC, said Friday’s announcement didn’t go nearly far enough. Earthjustice released a statement saying:
As NRDC notes, the increase in U.S. oil production — mostly in shale-rock formations in Texas and North Dakota — has caused the oil industry to step up transport of its product by rail. In 2009, U.S. crude “filled a mere 8,000 rail tanker cars,” NRDC notes. In 2013, it filled 400,000.
A series of fiery accidents have spurred calls for increased safety: In July 2013, an oil train went out of control, crashed and exploded in the Quebec city of Lac-Megantic, killing 47 people. Earlier this year oil trains derailed in West Virginia, Illinois and Ontario.
It’s no coincidence that, when a train full of less volatile ethanol fuel derailed in North Dakota in February, the damage was much less severe.
The accidents have put the spotlight on how U.S. and Canadian-produced oil is transported around North America. Environmentalists also are strongly opposed to extending the Keystone XL pipeline through the U.S. to the Gulf of Mexico, and so far that project has been shelved as the State Department considers whether to approve it. President Obama has indicated his disapproval. But the debate hasn’t made Americans much more informed about it. The University of Texas at Austin conducted a poll and found that only 42 percent of adults were even aware of the project.
What do you think is the safest, most efficient way to move oil around?
Chevy Spark EV price cut appears to have worked, as April sales surge
In the market for the electric version of General Motors Co.GM +1.03%’s Chevrolet Spark compact car? It appears you’re no longer alone, as the auto maker appears to have pretty much sold out of the previously slow-seller in April.
The U.S. oil production decline has begun
It is not because of decreased rig count. It is because cash flow at current oil prices is too low to complete most wells being drilled.
U.S. sets new rules for oil shipments by rail
Ending months of delays and uncertainty, federal regulators on Friday disclosed new rules for safer transportation of crude oil by trains, introducing a new tank car standard and mandating the use of new braking technology.
These titans of oil are experts at making bold predictions
Nobody saw it coming. Oil prices had been sliding, but on Oct. 1, the future still looked bright. For the next three months, oil would average $97 a barrel, according to a Bloomberg survey of 36 analysts. The first quarter of 2015 would be even better. The most pessimistic among them called for $91 a barrel. Ha.
Med students ask Gates Foundation to divest from fossil fuels
The fossil fuel industry is a bigger threat to global health than tobacco and the Bill and Melinda Gates Foundation and the Wellcome Trust have a moral obligation to divest from it, an international organisation that represents 1 million medical students has said.
Despite quick charging, Toyota exec says electric cars won’t work for long ranges
Toyota does not like battery-electric cars, and the world’s largest carmaker isn’t shy about that sentiment.
Tesla Model X & Model 3 on schedule
The delivery schedule for Tesla’s Model X SUV is still on track, going by the company’s most recent filing with the SEC (on April 23) — which reported that both the Alpha and Beta prototypes of the electric SUV had been completed.
Can energy storage assure Tesla’s survival?
/in Over a Barrel Blog, World wtucker, newleaf /by Arctic LeafElon Musk’s bet that he can sell 50,000 versions of the Model 3, the $35,000 version of the Tesla, due out in 2017, still seems like a long shot, given the somewhat limited market for electric cars.
But he might have one more card up his sleeve. The development of solar energy for home use offers an alternative market for his batteries that could be enough to save Tesla from a market collapse.
Musk is unveiling a new home storage unit that will allow homeowners to move their electrical consumption from expensive peak rates to the rock-bottom rates of overnight power. If nothing else, this will create a secondary market for the millions of lithium-ion batteries that Tesla will be cranking out from its $5 billion Gigafactory in Nevada, which is scheduled to be operational in 2017.
Early indications are that the demand for batteries to power the mid-priced roadster might be thinner than anticipated. Musk was counting on big demand from China, and already there are indications that it’s a much tougher market than he realized. As reported here last week, China already has 100 manufacturers turning out 400,000 undersized vehicles a year that can reach 48 miles an hour. They certainly wouldn’t sell in the United States, but for a million Chinese, it’s just what they need to putter around their small villages and cities. China also has 90 million electric scooters on the road and 120 million electric bicycles — an entire electric-vehicle market that doesn’t exist in this country. Making a dent in this market with a $35,000 scaled-down version of a luxury vehicle is not going to be easy, which is why Musk cut his China effort in half only a few weeks ago.
But there’s an out here in the burgeoning market for home electric storage that is taking shape in the United States, particularly in California. The Golden State has established a goal of getting 33 percent of its electricity from renewable resources by 2020, and 50 percent by 2030. Now powering with renewables isn’t just a matter of putting up solar collectors and windmills. You have to store that electricity for a time when it’s needed. Otherwise, most of it is wasted. And that’s where Musk’s plan to power electric vehicles with large complements of relatively small lithium-ion batteries enters in, because such a system also will be ideal for storing electricity in household-sized units.
Without any fanfare, Tesla already has installed such a system in more than 100 homes in California. It also has a deal with Walmart to install it on a commercial scale. “Tesla has been able to install more than 100 projects, really without anyone noticing,” Andrea James, a Dougherty & Co. analyst, told Bloomberg. She also estimated that the home-storage business could add $70 to Tesla’s stock, about one-third of its current value.
The effort already has paid off for Tesla in that it has collected $65 million in state incentives under the advanced storage technology portion of California’s Self-Generation Incentive Program (SGIP), which rewards users for coming up with ways of generating their own power. With household units running anywhere from $2,000 to $10,000, they’re going to need plenty of help from the government.
Tesla is not the only company working on battery storage. Bosch, General Electric and Samsung all have experimental systems going. There are also research projects being conducted at Harvard, MIT and other universities.
In Notrees, Texas, Duke Energy Renewables, with the help of the Department of Energy, has built a project that is using thousands of lead-acid batteries to store the electricity from a large wind farm. The lead-acid batteries are more expensive, however, and require frequent repair. Also, Duke has found that there is not as much of a market for their product as it had anticipated, mainly due to the costs. “There was little interest from customers willing to pay for that,” said Greg Wolf, president of Duke Energy Renewables, according to The New York Times. “That has not evolved as much as some folks, including ourselves, thought.”
But there are other opportunities that could enhance Tesla’s overall business model. One is that when lithium-ion batteries begin to lose their power so that they are no longer capable of driving a car, they still remain strong enough to power a home storage system. That could mean there will be a secondary market for Tesla’s car batteries.
Another dream that has always been in the back of people’s minds is that the electric vehicles themselves could serve as storage for utility power, drawing on cheap nighttime power and then reselling it to utilities during the day. This would involve an elaborate infrastructure, however, and this would mean the cars would not be available for a good part of the day if their stored power was being fed to the grid.
Altogether, however, the storage potential of the batteries means that Tesla will have an alternative means of income in addition to the electric cars. This means the company could diversify enough so that it will not depend entirely on the success of the Model 3. In the long run, this might mean that the company can survive long enough to make the electric vehicle a standard item for the American consumer.