Why You Could Soon Be Buying Your Electricity From Elon Musk

Why you could soon be buying your electricity from Elon Musk

Some time ago smart grid utility experts began to speculate that as automobile transportation morphed to electric vehicles, the vehicles’ batteries could be used as an energy storage medium to improve the inefficient peaks and valleys of energy production and usage on the grid itself. Part of what is now known as “distributed energy generation,”  distributed energy is a profound change in the way we think about electrical energy production and distribution. Today the current grid system, is dominated by large centralized power generation facilities. In the future, the electric power grid will be more like the design of the World Wide Web, with many nodes generating, storing, using, and both buying and selling their energy in this distributed system. As with the Internet, no one node can cause a failure of the larger system, as other generation sites and routes substitute for the failed node. At least that is the theory.
Elon Musk and Tesla appear to be on the verge of making this a reality.  I have also previously written about the major implications this may have on the electric utility industry. Read on.
Reblogged from Quartz
By John McDuling @jmcduling 4 hours ago

An energy storage grid on wheels? AP Photo/Paul Sakuma

Last week, we argued that Tesla’s most disruptive product might not be its cars.


Today, Morgan Stanley has provided further detail around this thesis, which is gaining increased traction on Wall Street. Tesla shares have soared about 13% this morning and are trading at fresh highs.


In a note published this morning, the investment bank posits that Elon Musk’s electric car company, which will unveil its plans to build  the world’s biggest lithium-ion battery pack facility this week, is poised to disrupt the $1.5 trillion electric utility industry. Tesla doesn’t just make high-performance automobiles, Morgan Stanley analyst Adam Jonas argues, it’s also producing a mobile fleet of electrical grid storage.  The 40,000 Tesla vehicles already on the US roads contain about 3.3 gigawatts of storage capacity, roughly 0.3% of US electrical production capacity and 14% of US grid storage, he estimates. 


By 2028, Morgan Stanley (which, it must be said, is among the most bullish of all Wall Street banks when it comes to the car company) estimates there will be 3.9 million Tesla vehicles on US roads. They will have a combined energy storage capacity of 237 gigawatts, some 22% of today’s US production capacity and nearly 10 times larger than all US grid storage that exists today.


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Tesla’s “giga-factory,” where the lithium-ion battery packs will be produced, will probably cost $1 billion to build, Morgan Stanley estimates. But there will be myriad opportunities for the company to reap returns from that investment beyond sales of its own cars.


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Plenty of questions remain about Telsa’s competency in the field of battery production and energy storage. At the moment, Tesla’s batteries are produced by Panasonic, which some expect to be a partner in the giga-factory.  At any rate it’s worth remembering that multiple battery fires last year sparked a federal probeinto the company. (There were no injuries, and Musk has forcefully argued that there is “absolutely zero doubt that it is safer to power a car with a battery than a large tank of highly flammable liquid.”)


Last week a Barron’s report  (paywall) said Tesla’s lofty valuation “exceeds fundamental reasoning.” But if Tesla really can become the world’s low-cost producer in energy storage, as Morgan Stanley predicts, then maybe it’s not so insane, after all