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#sowhoknew: Tesla – from electric cars to the future of utilities?

Elon Musk is clearly not content with just producing revolutionary electric cars and building spacecraft. Now he has designs on being the world’s biggest utility company…

The entrepreneurial billionaire is most famous for the development of the quite astounding Tesla marque (I’ve been lucky enough to have been in one) which instantly took the perception of an electric vehicle from being no more than a glorified golf buggy to that of a bonafide supercar.

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This week though, he launched a new venture called ‘Tesla Energy’ and simultaneously unveiled the ‘Power Wall’ – a home electricity storage unit which can harness energy from renewable sources such as solar and wind. And the media have been all ‘electrified’ by the news (eg. Wall Street Journal, BBC, Forbes etc.)

So basically it’s just a big battery right? Well kind of. But not exactly. It’s actually so much more than that. In his own inimitable style Musk said “the issue with existing batteries is that they suck. They are expensive, unreliable and bad in every way.” No argument from anyone on that point I guess.

However, Tesla reckons their solution is different (as you’d expect) for two reasons. Firstly, it uses multiple batteries which are stacked up and used in unison rather than relying on one big unit. And secondly, it’s cheap. Only USD 3,500 for a 10 kWh version which, they claim, is sufficient to run the average US home for 10 hours a day. Musk went on to say that he believes the Power Wall can also help people in emerging markets or remote locations ‘leapfrog’ the need for existing power systems, much as mobile phones have superseded landlines in isolated geographies.

The way it works is pretty simple. The Power Wall charges itself predominantly through using solar or wind energy. Of course you need to have solar panels or a wind turbine which clearly adds to the cost if you don’t currently have those but after the initial outlay, the energy is effectively free. Now, the system will work independently but it can also integrate with the grid “to harness excess power and give customers the flexibility to draw energy from their own reserve.” The bank of connected batteries recharge in a ‘smart’ way, saving money by picking low-rate periods when electricity is cheapest. The energy is stored for later usage, for example at night, plus it can act as a back-up in the event of a power outage.

So has Musk managed to find the missing link to sustainable energy through ‘stationary storage’ or is this just a publicity stunt? Well his story is fairly compelling. During the launch he explained that 160 million battery packs could “transition” power usage in the US to renewable energy. And with 900 million units? He reckons that could shift the entire world’s energy needs from dirty fossil fuels to clean variants. Just imagine what a positive impact that would have on the planet and the way in which we live our lives?

And the implications for everyday technology are far reaching. If the same basic principles are applied to the battery storage capabilities of smartphones, tablets and watches then Nomophobia (i.e. the constant fear of battery drain) could be eliminated once and for all.

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But there are inevitably critics to system. Davide Andrea is a battery expert who claims that the costs just don’t stack up. He states that “Electricity is way too cheap to store in an expensive battery. It’s like saying I’m going to be storing my potatoes in a safe. Potatoes are too cheap to store in a safe.”

Still despite the cynicism, Tesla Energy has reportedly got some pretty big backers. Apparently both Apple and Google have signed up to trial the Power Wall in their offices and the state of Nevada has given them a USD 1.25 billion tax break to set up their first so-called ‘Gigafactory’ to produce the hardware.

So utility companies take note. Tesla are no longer in the transport business (whether that’s cars or spaceships). These guys are in the energy business. And that could prove to be, err, electric.

Steve Blakeman

Steve Blakeman is the Global Media Lead - Nestlé at Mindshare. Previously, he was the Managing Director - Global Accounts, OMD Europe. Previously, he was the CEO, Asia Pacific – OMD. Prior to that, he was Global Chief Integration Strategy Officer (Asia Pacific) for IPG Mediabrands (Initiative & Universal McCann). He has also had stints as worked as Managing Partner at Omnicom Media Group owned media agency, PHD where he successfully launched their second office in the UK. He began his career at JWT and has over two decades of experience in advertising, media and marketing communications.