Elon Musk's Next Business Venture: Home Energy Storage

How do you keep your 100-percent-solar-powered home’s lights burning bright at night? How do you maintain electricity during a power outage or natural disaster? The answer: home energy storage devices, which represent a growing market for utilities looking to balance the supply and demand of electricity, as well as consumers that want to get the most out of their renewable energy systems.

And now Tesla, the automaker famous for its all-electric Model S sedan, wants to get in on the action. In an earnings call last week, CEO Elon Musk announced that the company will soon unveil a consumer lithium-ion battery that can be used to store energy in homes or businesses, according to Green Car Reports.

Musk noted that the battery pack’s design is complete and that he was pleased with the result. The Palo Alto, California-based company will start production on the consumer battery in about six months, he said.

It was only a few sentences during last week’s conference call, but Musk’s comments set business media abuzz. Green Car Reports confirmed with Tesla’s director of global communications, Khobi Brooklyn, that the luxury electric vehicle maker will soon formally announce its new product.

Releasing a consumer battery pack is almost a no-brainer for Tesla: The Silicon Valley company already manufactures residential battery systems for customers of SolarCity, the solar installer that names Musk as its chairman and largest shareholder.

Speculation that Tesla would delve deeper into consumer energy storage began last year when the media uncovered documents filed with the Securities and Exchange Commission indicating the company planned to produce lithium-ion batteries for “stationary storage applications” – in addition to batteries for its luxury vehicles – at its new “Gigafactory.”

Then, in an earnings call last May, Musk spoke about the company’s plans to build a battery system for homes, rather than just cars, Forbes reported.

“We are trying to figure out what would be a cool stationary (battery) pack,” Musk said in the call. “Some will be like the Model S pack: something flat, 5 inches off the wall, wall mounted, with a beautiful cover, an integrated bi-directional inverter, and plug and play.”

In addition to serving as a back-up power system during an electrical outage, an energy storage device for a home or business can reduce peak-use charges on utility bills. Many utilities charge more for electricity used during times of “peak” energy demand – usually in the afternoon. Consumers with their own energy storage system can draw power from the battery, instead of the grid, during these expensive peak-demand hours, and then recharge the battery during off-peak times, when the electrical rates are lower.

While the global residential energy storage market has lagged in recent years – mainly because of its close ties to the volatile solar market – the sector is poised to expand by 90 percent this year, according to research firm IHS. As the solar industry booms, lithium-ion battery prices drop and homeowners become more interested in going off the grid, IHS predicts that the home energy storage market, coupled with solar installations, will reach more than 900 megawatts in 2018, up from just 90 megawatts last year. And Tesla and Elon Musk, as always, will be right there on the cutting edge of a burgeoning technology.

Image credit: Tesla Motors

Passionate about both writing and sustainability, Alexis Petru is freelance journalist and communications consultant based in the San Francisco Bay Area whose work has appeared on Earth911, Huffington Post and Patch.com. Prior to working as a writer, she coordinated environmental programs for Bay Area cities and counties. Connect with Alexis on Twitter at @alexispetru