There's no escaping from Tesla this week.
The media darling dominated the headlines with its release of the Model 3, an event punctuated by a company celebration before the company goes into "production hell."
The reviews were anything but hellacious. Tom Randall from Bloomberg wrote that the car "changes everything."
The success of this vehicle is really the success of its batteries. As I explored here, Tesla managed to shrink the cost of the batteries while increasing their range relative to what customers get in the luxury Model S. Now you could buy a Model S 100D for $97,500 and get 335 miles of range, or get the long-range Model 3 with 310 miles at $44,000.
The long-range Model 3 has the best range-per-price ratio of any electric car on the market. Compared to 310 miles, the 83-mile range of a VW E-Golf and the 87-mile range of the Mercedes-Benz B250-e start to look a little sad.
The Chevy Bolt comes much closer on the key stats, with 238 miles and a sticker price of $37,495. After his test drive, though, Randall found major differences in the experience of those cars.
"The Bolt is an economy gasoline car that’s been electrified; the Model 3 is, well, something altogether different," he writes.
If Elon can hit his ambitious production targets (while pumping out 100 megawatts of storage for Australia from the same factor), the success of the Model 3 will crystallize the threat to other automakers if they don't get their EV act together. Seeing how invested major automakers are in freezing or weakening the vehicle efficiency standards they agreed to implement under Barack Obama's presidency, it's reasonable to conclude that additional push factors are needed.
Now that that's out of the way, we've got two more Tesla updates, because it's just that sort of week.
By land and by sea
Deepwater Wind has tapped Tesla to provide batteries for a proposed offshore wind farm off the coast of Massachusetts. The developer is looking for a 40-megawatt-hour battery system to pair with the 144-megawatt Revolution Wind farm.
That's a much higher ratio than previous offshore wind and storage pairings, Jeff St. John reports. The European projects have focused on frequency regulation, and only needed a few megawatts of storage to deliver that. In Massachusetts, Deepwater Wind wants to make its wind power dispatchable.
That's necessary for this particular RFP, which calls for assets that can serve the state's winter peaks, when rising demand for heating electricity, combined with cold-related power plant problems, can drive emergency-level grid imbalances.
This proposal has not yet been approved; if it gets the green light, it won't be operational until 2023. It's premature to say offshore wind has really arrived, but it's at least part of the conversation.
A conveniently timed quarterly earnings report
It's hard to imagine a better time to release quarterly earnings than hot on the heals of a dramatic new car launch.
In a letter to investors Wednesday, Tesla crowed about Model 3 fever: "With no advertising, paid endorsements or guerilla marketing campaigns, Model 3 net reservations have still steadily climbed every month, and have even accelerated further in recent weeks."
The newsy stuff came from the "sustainable energy" operation. The company deployed 176 megawatts of solar generation and 97 megawatt-hours of energy storage in Q2 (that's counting the 52-megawatt-hour project in Kauai, which was installed in Q1 but passed inspection in Q2). That's quite a lot of storage.
The description of Tesla's solar business reads like the miffed parent that returns from a weekend out and has to clean up the wreckage of SolarCity's sloppy house party.
Whereas Tesla's storage business grew year-over-year, solar deployments "declined from Q2 last year as we continue to focus on more profitable projects that generate positive cash flow."
The new management also axed SolarCity's door-to-door sales operations, opting instead for the classier sales channels of Tesla stores and online.
Coincident with Tesla's outlandish decision to sell rooftop solar in a way that generates profit, the share of customer-owned systems has risen dramatically, from 6 percent in Q2 last year to 37 percent this year. Sunrun's theory of overwhelming customer preference for leases looks like more and more of an outlier.
Tesla also sold its stake in a portfolio of SolarCity leases for $313 million.
In very short order, Tesla has excised or overturned almost everything about how SolarCity did business: the brothers Rive, project choice, sales channels, target customers, financing strategy. We're seeing a very different company emerge.
Grid-scale storage better watch out
Shayle Kann kicked off last year's Energy Storage Summit with a warning: Though energy storage, by all accounts, is poised to surge in the coming years, we also need to look out for signs of a bubble.
I've got a new entry in the list of scenarios that might challenge the rosier view of storage uptake.
On a visit to GE's San Ramon campus, which feels like a Silicon Valley compound even though it lies in the mountains of the East Bay, I got an overview of the company's digital strategy. In a nutshell, GE's going the route of Salesforce rather than Uber: Instead of shattering the incumbent utility model, it's chasing the profits to be gained from helping utilities do their job better.
That includes digitizing all the assets in a utility fleet and using data analytics to operate them more efficiently. Once that's done, an existing gas plant can be operated with the precision to handle most of the peak capacity and frequency regulation duties that grid storage claims to cover, said Niloy Sanyal, chief marketing officer for GE Power Digital.
This would be cost-effective for utilities: Rather than buying new batteries, they would achieve better utilization of existing gas plants, which they've been using to balance out variable renewables anyhow. Naturally, such a scenario would complicate the pitch for utility-scale storage.
This "virtual battery" approach (see full article here) is still in its infancy. If it achieves uptake, storage providers will have to show why utilities need a new asset to do the job.
Hawaii doubles down on solar-plus-storage
Powin Energy was selected to supply 2.4 megawatt-hours of battery systems across 7 sites on Oahu and Kauai. The lithium-iron-phosphate systems will store 2 to 4 hours of energy. Several of the systems are going into carports, but notable sites include a Boy Scouts council and campsite, as well as the Kauai Beach Resort.
In contrast to the usual value-stacking mantra, these systems initially will just shift solar generation for evening and nighttime consumption. Powin could layer on grid services applications down the road, but those won't be in place at the outset.
Although the use of battery storage lowers the overall returns, the company told me, the higher cost of electricity in Hawaii makes the hybrid installation economical.
Storage+meatballs
The iconic purveyor of flat-packed Scandinavian furniture is bringing residential storage to the U.K.
Ikea is selling solar panels from Solarcentury alongside lithium-ion batteries from LG Chem in 3.3-kilowatt-hour and 6.5-kilowatt-hour configurations. Those would be small by American standards, but make a better fit with the typically smaller, more energy-frugal British domicile.
The pitch banks on the U.K. feed-in tariff, which features a considerably higher delta between retail rates and the amount paid for exported solar than is available in the U.S. Even then, Ikea advertises a 12-year payback for a typical customer, which might play well with people who don't care about a timely ROI.
