Elon Musk: missing piece of renewables puzzle

June 20, 2016

3 minute read

Elon Musk: missing piece of renewables puzzle

by John Mathews, Professor, Strategic Management, Macquarie University, Australia, ProjectM

While wind and solar power have made great strides in recent years, with renewables now accounting for 22% of electric energy generated, the issue that has held them back has been their transience. The sun doesn’t shine at night and the wind doesn’t blow year-round – these are the mantras of all those opposed to the progress of renewables.

Now the renewable power billionaire Elon Musk has just blown away that final defense. In California he introduced to the world Tesla’s sleek new Powerwall – a wall-mounted energy storage unit that can hold 10 kilowatt hours (kWh) of electric energy, and deliver it at an average of two kilowatts, all for $3,500. Taking installation costs and inverters into account, that translates into an electricity price of around $500 per kWh – less than half current costs, as estimated by Deutsche Bank.

That translates into delivered energy at around six cents per kWh for the household, meaning that a domestic system plus storage would still come out ahead of coal-fired power delivered through the conventional grid. What’s more, Musk is going to manufacture the batteries in the United States, at the “gigafactory” he is building just over the border from California in Nevada. He is not waiting for some totally new technology, but is scaling up the tried and tested lithium-ion battery that he is already using for his electric vehicles.

Now the fossil fuel companies … will be on the defensiveThis break-through in energy storage as well as further innovations in the field are likely to offer attractive investment opportunities to long-term, future minded investors. Now the fossil fuel companies – from fuel suppliers such as coal miners to coal-burning electric power utilities – will be on the defensive, fighting the new normal of cheaper renewable supplies and storage. Instead of asking “can we have our own energy system?” communities will be asking “why can’t we have it?”

The Powerwall system offering 10 kWh is targeted at domestic users. It is complemented by a commercial system termed the Powerpack offering 100 kWh storage, and a stack of 100 such units to form a 10 megawatt hour storage unit that can be used at the scale of small electricity grids. Whole communities could build micro-grid power supply systems around such a 10 MWh energy storage system, fed by renewable energy generation (wind power or rooftop solar power), at costs that just became super-competitive.

Musk maintained that the entire electric power grid of the US could be replicated with just 160 million of his storage units. And two billion of the utility-scale units could provide storage of 20 trillion kWh – electric power for the world.

LET THE REVOLUTION BEGIN

To put these figures in context: The number of commercial vehicles on the world’s roads is likely to reach two billion by 2020. Nearly 100 million new vehicles are being added every year.

If it’s feasible to build these exhaust-pumping complex machines, it’s certainly feasible to build the storage units that will help to make them unnecessary. What’s more, Elon Musk has just announced that he intends to do so.

Musk is a Henry Ford-style figure who takes others’ innovations and scales them up. Suddenly the world of renewable energy just moved to become the new normal – because when combined with cost-effective storage it becomes unbeatable.

Musk will not be alone. Already China is gearing up to be the world’s renewable energy superpower, with the largest installed base of wind power and probably by this year the world’s largest installed base of solar photovoltaic (PV) power, as well as by far the world’s largest manufacturing system for wind turbines and solar photovoltaic cells.

There are already Chinese companies such as BYD producing their own energy storage units based on lithium ion technology for both domestic and commercial usage – although not as sleek nor as cheap as the new Tesla offering.

But give them time and they will be producing at comparable scale and cost, or bettering it. This is capitalist competition – and its propagation is what makes Tesla’s announcement the start of the real renewables revolution.

China has given the world a huge lesson in the business-like way it has gone about building and promoting its renewable energy industries, importing technology from around the world and now improving on it as well, and scaling up production so as to drive down costs.

Now Musk has just taken that process one decisive further step, to encompass storage as well as renewable power generation. From here there is no going back.

This article was originally published by theconversation.com