Tesla is an eye-catching company active in clean energy applications – not only pure electric cars, but also home battery systems. With the launch of its Powerwall on April 30, 2015 and every progress update on the building of its Gigafactory, Tesla has continued to fuel interest in home battery systems.
Residential batteries, together with battery applications in commercial, industrial and utilities, are considered to be the next big opportunity in batteries besides electric vehicles. Indeed, this will become a US$6 billion market by 2026 as predicted by the new IDTechEx Research report “Batteries for Residential, Commercial, Industrial and Utility Applications 2016-2026: Technologies, Markets, Players and Opportunities”.
Tesla brought global attention to the market
On April 30, 2015, Tesla officially launched its residential and commercial/utility-scale energy system products “Powerwall” and “Powerpack” in Los Angeles, with the price well below earlier expectations (the production of the 10kWh Powerwall was stopped due to the relatively low price-performance ratio).
This kind of battery system was not the first approach of its kind. As early as 2013, SolarCity had already launched an energy storage system called DemandLogic, which was used to reduce businesses’ peak demand, provide backup power during outages and potentially save energy costs.
This system also utilised Tesla battery technology – the same lithium-ion battery packs used in Tesla cars. However, the price of the DemandLogic battery system at that time was expensive and was mainly for medium-scale applications.
Tesla always wanted to launch a battery storage system that could be adopted by households. The launch of Powerwall could incorporate SolarCity’s plan in residential energy storage, with the merge between Tesla and SolarCity further proving this.
Tesla the follower?
In a typical fashion Tesla managed to attract tremendous attention, yet Tesla Energy is neither the first nor the best product of its kind. In fact, in many ways, Tesla is a follower. For example, the German startup Sonnen started to sell residential batteries as early as 2011, whilst in the same year in Japan, Sony and Sharp launched their products after the Tohoku earthquake with attention focused on the critical importance of back-up residential energy storage in emergency situations.
Current market status
Today the residential battery sector is not only being chased by battery makers. Instead, a cross-industry business is taking shape as evidenced by the large number of recent acquisitions, joint ventures and investment.
Battery business for consumer electronics has gradually reached a plateau and automotive companies are moving into residential/grid battery areas to de-risk their investment and further reduce battery costs with the help of economies of scale.
The market is therefore fragmented with companies in various areas jumping in, including solar cells integrators, automotive players, cell makers, battery manufacturers, chemical suppliers, trading companies, power utilities, and many more.
It is clear that residential batteries can generate both economic values that can be monetised and values that are not directly monetised in households and electricity networks. An important consideration is whether they can demonstrate positive economic return based on current price range and value streams, which is a significant factor when predicting future deployment. Technology is not the major driver, as analysed in this report.