Tesla’s Home Storage System – Disruptive for Utilities

The real impact of the recently announced Tesla battery home storage system will be to utilities. And this will be a disruptive impact. The Tesla battery, along with a sophisticated power management system, has the potential to substantially decrease the demand of a home solar system on power from the grid and on the grid, itself.

Several utilities, including those in Wisconsin, New Mexico and Arizona have introduced fees that raise the costs for a solar homeowner’s use of the grid. The argument from utilities is that solar homeowners place demands on the grid without paying for the full expenses of the utility for grid maintenance.

Most home solar systems do not isolate the home from the grid. During peak power times and in early evenings, solar homeowners purchase power from the grid. During sunny, non-peak hours, they sell excess generated power to the grid through net metering agreements. Net metering, which is policy in most US states, allows a solar homeowner to provide home-generated power to the grid during sunny, low peak power periods. The solar homeowner then uses power from the grid during more expensive high peak power periods such as hot sunny afternoons or early evening. But they offset the homeowner’s cost of the more expensive peak power during a billing cycle with their own power, which was sold to the grid during the non-peak period of the day.

Newly imposed fees by some utilities such as Arizona’s Salt River Project (SRP) are designed to share more fairly the utilities’ expense for the grid and its maintenance among those with and without home solar systems. For example, SRP has recently introduced a grid fairness fee that is based on a solar homeowner’s use of peak demand power. With the Tesla battery or an alternative, along with a sophisticated power management system, the SRP customer with home solar can substantially reduce its demand for peak power by depending upon stored power from earlier in the day. This will further reduce the solar homeowner’s dependence on the grid. And it will leave more of the expense for the grid to the utility and to customers without solar power.

Tesla’s new home battery, among others such as some recent ones from Germany, will be disruptive. Depending upon a homeowner’s demands for power, it can isolate a home from the grid or nearly isolate it, especially with likely improvements to the battery and related technology. It can certainly substantially reduce the solar homeowner’s dependence on the grid. In places like Arizona, where some solar suppliers have discontinued installation of home solar to SRP customers, the Tesla battery and its competitors will reopen those markets to home solar systems.

We are seeing substantial improvements to the efficiency of photovoltaics, lithium ion batteries and battery power management systems. Those improvements have the potential to alter how we generate power, who owns power generation systems, and how we maintain a power grid that we will continue to need.