Solar City and Tesla: Old Energy’s Worst Nightmare

March 12, 2014

Their worst nightmare.

Another story of cutting edge business leader telling old energy, and climate deniers, to take a hike.

If you haven’t listened to Elon Musk discuss his strategic vision, go there now.


SolarCity, the country’s biggest solar PV installer, and Tesla Motors, the country’s biggest electric vehicle maker (and soon to be the country’s biggest advanced battery manufacturer), could be the utility industry’s worst nightmare.

Consider the threat represented by two fast-growing companies, combining forces to bring energy independence to utility customers via mass-market battery-backed solar systems. It’s a transformation that strikes at the heart of the “we make it, you buy it” electric utility business model that has kept the grid humming and modern industrial society running for the past century.

But looked at another way, the SolarCity/Tesla solar-energy storage push could be seen as a solution to a host of utility and grid challenges. That’s because SolarCity’s small but growing number of energy storage installations aren’t just a lot of relatively tiny batteries, backing up lots of relatively tiny solar PV systems, in isolation from the grid.

Instead, they’re more like a “fleet” of energy assets, complete with the on-site digital controls and real-time communications systems required to enlist them into a host of grid needs — if, that is, the regulatory and business models to make it worthwhile for customers and utilities alike can be put into place.

That’s how Eric Carlson, SolarCity’s senior director of grid integration, described the company’s approach to solar-storage integration in a recent interview. Right now, the company’s residential battery installations are meant for emergency backup, while its commercial installations are for demand peak shaving — functions that aren’t directly tied to grid or utility imperatives.

“What we’ve built, though, is really a general purpose energy storage system,” he said, consisting of a set of lithium-ion batteries provided by Tesla, with both high power and deep-cycling capabilities. That could be a valuable resource for a whole host of grid functions, if it’s connected to the IT infrastructure to make use of it — and SolarCity just happens to have that infrastructure in place.

The network effect for distributed solar-battery systems

“Every single solar system we’ve installed — and now, every single battery system we’ve installed — has one of these gateways,” he said, referring to a configuration that includes a fairly powerful computer, networked to SolarCity’s central cloud-based server infrastructure. These gateways have the ability to collect data and interact with the inverters that turn PV and battery DC power into grid-ready AC power, he noted.

Right now, SolarCity uses those gateways to collect interval data from its PV systems, as well as customer energy consumption and power quality data, he said. “We typically collect it in fifteen-minute intervals, but in many cases, we also collect it in much faster intervals, and we have real-time links with these systems,” via a combination of broadband and cellular connections, he said.

That’s not necessarily how most solar installers operate, he added. While most PV systems come with some kind of metering and communications attached, they tend to be single-purpose devices, meant to collect energy data for net metering or off-site troubleshooting of system performance.

Indeed, SolarCity’s decision to install more powerful computing platforms at each customer site could be seen as overkill, in terms of what that computing power is worth today. SolarCity has been tapping its fleet of smart solar home data collection devices to  assist in various research projects, such as the 2010 California Solar Initiative project that got it started installing Tesla batteries in SolarCity-equipped homes.

But once it’s in place, the technology opens up a whole range of grid-facing applications that require near-real-time communications and on-site digital controls to handle.  “It’s really [about] knowing the right algorithms to put on that general-purpose computer, and designing a system that’s flexible and future-upgradeable. That’s something we’ve spent a lot of time on as a company,” he said.

And that means that “what we’re deploying today is, I’d say, not significantly limited in future applications. We see solar plus storage as being able to replace much of the need for other pieces of grid infrastructure.”


11 Responses to “Solar City and Tesla: Old Energy’s Worst Nightmare”

  1. rayduray Says:

    Old energy on the auction block. Gosh, I never thought I’d see the day a nuclear power plant was parted out and sold at auction. We’re not in Kansas any more, Dorothy. This is a brand new world.

    San Onofre gets boned out:

  2. Some other examples of smart energy storage supplying power to valuable peak time or as grid services like frequency stability.
    Balqon and Solar City both supply lithium smart storage units with inverter for use ranging from residential to utility markets.

  3. climatebob Says:

    When you are on solar it makes you think about the power you use and when. I put my hot water immersion on a time switch so that it only heats when the sun’s at its maximum and that saves another few Kilo watts a month. By now everyone knows my bill last month was only $0.74.

    • rayduray Says:

      Hi bob,

      I’m wondering what your preference will be in the future. Obviously, $0.74 per month does not begin to cover the costs of maintaining a transmission and distribution system. Will you prefer to cut the umbilical to utility power in the future or would you be willing to pay a reasonable charge for system maintenance?

      I’ve become curious about how well trained we are as atomized, individualized consumerbots. Here in my region, oftentimes the people who would see the libertarian solution to be buying their own solar gear to cut their utility bills just seem blind to the issue of maintaining public infrastructure. YMMV. 🙂

      • Phillip Shaw Says:

        An issue you, and many others, seem to be blind to is that the electrical distribution grid in many areas is not public infrastructure, its privately owned by a for-profit utility. So it’s analogous to a toll road and not a public highway. Even where the electrical utility is municipally owned, it is often a source of revenue for other city functions. Here in Austin, Austin Energy is our municipal utility and its revenue is tapped for about a million dollars a week (over $50M per year) which is rolled into the city’s general fund. There is an on-going debate about the fairness of this levy on electrical consumers – but that’s a separate issue.

        The real question is how much should a consumer have to pay for access to the grid? Going back to my road analogy, should a person who bikes to work or rides public transportation have to pay all of the gas taxes, registration fees and tolls paid by motorists? Should we have to pay for the construction and maintenance of a toll road we use seldom if at all? Isn’t that what you’re advocating when you say that low usage consumers like ClimateBob should pay more to maintain the transmission and distribution infrastructure? How do you justify shifting infrastructure costs onto the low usage (low carbon) consumers and making them subsidize the high carbon consumers?

        If your point is that the traditional utility rate structure is obsolete and needs to change then we have no argument. In most utilities today, the distribution infrastructure costs are lumped with the transmission and generating costs and rolled into the price per kWH charged to the customers. When electrical demand is high the relatively fixed costs of distribution are spread over a lot of power and constitute a small fraction of the rate. But as we are seeing across the globe, when demand is shrinking, either through improved energy efficiency or adoption of renewables, then those fixed distribution infrastructure costs make up a bigger fraction of the utility’s operating expenses. With shrinking revenue from reduced usage, the fixed infrastructure costs assume an increasing dominant fraction. Net-metering can exacerbate this trend. Look at the logical extreme – a utility where all customers generate enough power to meet their average monthly usage (net usage zero) – the utility has all of the fixed costs and no revenue to
        pay them. The traditional rate structure is a financial disaster in the making.

        A solution is to separate the utility costs into different categories – distribution, transmission, and generation – and charge the utility customers only for the type, and level, of service they use. A residential customer with 15 kVA service would pay one connection fee, a small business with a 45 kVA service would pay a higher monthly fee, and a large commercial customer with, say, 1500 kVA service would pay still more. If a customer installs solar or wind capacity then he pays for any net energy he consumes and the connection fee covered his share of the distribution infrastructure costs. In many cases a customer with solar and battery storage may opt for a minimal level of service connection, say 2 kVA, which would allow him to keep some lights, internet, and such working during periods when his system is down. This approach rewards conservation and adoption of RE without bankrupting the utility.

        • A rational post. How refreshing. There are lots of ways out of the grid/no grid, bankrupting the utility dilemma. The grid is not going away, and most utilities are not going away and there will have to be change. Utility failures have been due to reduced demand mistakes/stranded assets/overcapacity, bad business models and failure to follow the changes introduced by renewables. There will be winners and losers. There has been quite a bit of discussion about utility decoupling. Its early to tell what will work and there are lots of possibilities.

  4. rayduray Says:

    Now if this don’t take the cake. Recently we’ve all gotten a good snicker out the venal, vengeful nature of New Jersey politics as the Governor created a 2 hour lie-fest to exonerate himself from the Atlantic City traffic jam controversy.

    Now I want to see how Christie exonerates himself from shutting down Tesla’s New Jersey operation for the sake of his bribery buddies in the state’s car dealerships.

    Headline: New Jersey Banned Tesla To Help Out Car Dealers

    In brief: “If you want to buy a Tesla in the Garden State, after April 1 you’ll have to try your luck somewhere else.

    “New Jersey regulators caved to pressure from car dealers and decided on Tuesday to ban automakers that want to sell directly to customers from doing so in the state. The New Jersey Motor Vehicle Commission rushed through a rule change and voted 6-0 to adopt this new regulation that mandates that all new car dealers get a franchise agreement if they want a state license to sell cars in New Jersey. “

    • dumboldguy Says:

      We may perhaps forgive Ray for bringing up a non-existent “Atlantic City traffic jam controversy” in his rush to politicize today’s discussion on Crock. We know how he likes to rush around “digging” and often doesn’t “focus”. The actual “controversy” was about traffic Jams on the George Washington Bridge across the Hudson to NYC. Perhaps Ray googled “Tesla political garbage” and found an article in the Atlantic City Press, the big paper in south Jersey, and that’s the source of his confusion.

      Except for the fact that Tesla is an EV and the company is in the forefront of green “news” lately, this “banning” from NJ belongs on the political and economic blogs, not on Crock.

      NJ is not the first state to take this action against the Tesla marketing model and will not be the last. Several states have done so already and others are considering it, and it’s NOT because the Tesla is a “green” car, in which case Crockers should be interested. It’s the free market, capitalism, politics, lobbying, and economic self-interest in action—the American Way on display, but of course that’s “bribery buddies” to anti-the American Way Ray.

      In true American fashion, Tesla is playing the game in the other direction, holding out the carrot of building manufacturing facilities and distribution centers in states that do not ban their marketing scheme—they are doing so in the SW U.S. right now. If they succeed, will Ray then talk about Tesla “bribing” the folks who just want to bring economic growth to their states? How many ways do you want it, Ray?

  5. Here is a comment from a blogger on another site. Seems applicable here.
    Its about solar renewables and storage, but that gets you into peaker generators also. He is pointing out how coal, not just gas, is becoming a peaking source, and wind and solar are taking over some base load. Local load management, not just grid load management, local storage, grid storage, peaker plants, better forecasts,… these are all part of an integrated system. This is happening now and in the near future, not 20 years out. In the meantime there are innovations in storage. Ironically, solar reduces a lot of the day/night storage market. Old paradigms are dying hard. This is not a guy interested in CO2 or GW. Just a guy looking at the future, renewables and so forth.
    “All this dicking around debating about how wind and solar need expensive backup is a sideshow.”
    “On the main stage in our own backyard we have formerly base load coal being forced to cycle. Somehow people are missing the connection here. If coal can cycle – has to cycle because of natural gas – then that’s a huge reservoir of flexibility that we didn’t know we had. Right now this reservoir of flexibility is primarily a technical resource but it won’t be long before it becomes an economic resource as well.

    If you don’t believe wind and solar will become cheaper than coal the disregard the logic train. But if you believe prices are going to cross over then think about what that means for fuel switching. It means a proven technical resource (load following coal) becomes an economical resource for wind/solar. All things equal it means as you add more wind and solar you’ll use less and less and less coal. This means cleaner and cleaner and cleaner air and water. Less Mercury, less PM, less SoX, less NoX, less asthma, less heart disease, less mountaintop removal, less acid rain… These are extremely positive non-esoteric things.

    The best way to reach the goals is to continue to invest in the best technologies that offer the most growth potential at the lowest price. There’s no debate about which technologies are the winners. On-shore wind and PV are one and two in terms of unit costs and two and one in terms of scalability. On top of this the resources complement each other seasonally and diurnally. Look at the situation for what it is… Manna from heaven… A 20 year runway for growth and change. How strong does the case need to be before people shut up and get in line?”

  6. Solar. The battle rages on. Check out the comments here for some snippets of the same debate seen here.
    Bob_Wallace Chris B • 3 days ago
    I got mine from a more recent source.

    And some interesting numbers to give to the anti-renewable folks who post about solar not paying back …

    Solar 0.5 to 1.8 years.
    Wind 0.25 to 0.75 years.
    Nuclear 6.5 to 14 years.
    Coal 1 to 2 years.
    1 • Reply•Share ›

    This is like a computer game. You could substitute characters from the other blog with with like bloggers here. Kind of nifty. 🙂

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