Tesla Becomes the Harbinger of Doom for Utilities
May 14, 2015
It is rare to see a new product, which could fundamentally change the way average Americans live, today is certainly not that day. However, upon announcing the Powerwall and Powerback (a battery designed to power homes, business and public utilities), Tesla innovators shined the media's light on the 800-pound gorilla, which has been staring American utility companies squarely in the face: batteries. Tesla is by no means alone or a first-mover in the battery market, with the construction of similar manufacturing facilities underway by mega-giants such as BMW, Ford, Chrysler, Nissan, BYD in China and Bosch in Germany.
So why was this announcement important for utilities?
- Utilities are losing customers. Tesla Energy already has over 38,000 pre-ordered Powerwall systems, and has said itself that it has an inability to satiate market demand even given its pending factory.
- The most ethereal yet costly threat utility companies may face is that of increasingly user-friendly and transmissible energy storage devices. Creating energy storage devices for entire homes, which are as easily tradable and mobile as the average alkaline battery is not the technology of today, but the very real possibility of tomorrow.
- The Energy Information Administration (EIA) sites that natural gas prices can fluctuate over the course of a day, with normal price volatility that can range from just a few cents to over twenty cents per million British Thermal Units (Btu) over 24 hours. Prices are typically highest at peak hours of the night, when most people are still awake.
To survive, electrical production companies need a way to outcompete battery manufacturers while updating much of America's aged and unreliable transmission infrastructure. Without this, or a significant decrease in the cost of batteries, the grid may become an expensive necessity only the poor and middle-income are relegated to.
Source: Santiago Bello, "Tesla Becomes the Harbinger of Doom for Utilities," National Center for Policy Analysis, May 13, 2015.
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