Morgan Stanley, a major investment bank, thinks the utility industry underestimates the potential of Tesla Motors ability to achieve dramatic reduction in battery storage costs. This breakthrough could potentially convince more people to go off-grid. In their detailed report released in late July, Solar Power & Energy Storage, Morgan Stanley says, "Energy storage, specifically Tesla’s product, could be disruptive in the US and Europe. Given the relatively high cost of the power grid, we think that customers in parts of the US and Europe may seek to avoid utility grid fees by going “off-grid” through a combination of solar power and energy storage. "
“We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost reduction magnitude that Tesla might be able to achieve. once the company has constructed its “Gigafactory”, targeted for completion later in the decade.“
While the costs of the utility networks are fixed and rising, the costs of these new disruptive technologies will continue to fall, and they're falling quicker than the incumbents realize.
Most battery manufacturers, the report notes, have a capacity of around 40MW to 50MW per annum. Tesla is proposing one of 1,000MW – and possibly many more. This, says Morgan Stanley, will slash the capital cost of Tesla’s battery from the current $250/kWh to $150/kWh by 2020, whereas its closest competitor will be at a cost of ~$500/kWh.
Morgan Stanley canvasses three types of approach to the arrival of storage:
On the grid, but net zero grid power usage. Under this approach, a customer’s solar panels produce excess power during the day (which is sold back to the grid), and at night the customer draws power from the grid. This approach could result in low or net zero usage of power produced by large-scale power plants attached to the grid.
On the grid, partial grid power usage. This approach is often taken in Europe, where solar panel systems are not sized to fully allow customers to eliminate their net usage of power from the grid, and where economics and regulation mean moving fully off-grid is very unlikely. It is thus unlikely that such customers pursue a fully off-grid approach.
Fully off the grid. In this approach, consumers fully depend on their on-site power generation, using storage and a power management system to provide power to the home when needed. Consumers could choose this approach for a number of reasons. For instance, in select markets, customers who choose to “net meter” as in the “on-grid” approach described above, have to pay a large non-bypassable, fixed grid charge; these consumers have an incentive to go fully off the grid.
“By 2028, we estimate Tesla’s 3.9 million units NA car population (or “park”) will have an energy storage capacity of 237 GW (443 GW globally), equal to 22% of today’s US production capacity and nearly 10x larger than the entirety of US grid storage that exists today. These figures exclude any recycled (2nd life) battery after EV use."
"Tesla Model S (85 kWh) can store enough energy to power the average US household for 3.5 days."