Why Tesla’s new battery for the home is in fact a big deal

The rumors go that Tesla is about to announce a battery for the home on 30th of April and press echo has been somewhat mixed so far. In fact this is quite a bit thing as it essentially tackles the same problem Nest is trying to solve: peak demand.

Peak demand (see short intro here http://energy.gov/sites/prod/files/2013/11/f5/53827-10.pdf) is quite a nasty thing: it actually is the rare (or not so rare) time when just about everybody wants (potentially a lot of) energy. In the U.K. this used to be called the five o’clock problem referring to just about every citizen of great Britain turning on their (now electric) water kettle at the same time. In a slightly different context this problem still exists today — think turning on the aircondition when coming home, charging your electric car when returning from work, etc.

Managing an energy grid to cater for peak demand can actually be quite a tricky thing. You may need to build new distribution lines, certainly have capacity available and your environmentally friendly sources like solar and wind power may not produce enough to cope with demand. You can of course trade energy in this case, getting it from bigger sources like nuclear, however whatever you do, it comes with a cost attached.

Peak demand infrastructure costs are high

As a rule of thumb, the top 1% of your energy demand peaks in your energy grid, account for about 10% of your infrastructure cost. So if you could just remove the top of the top of the problem pyramid, the savings would already be huge. This is where Tesla comes in handy now.

While Nest is trying to prevent the problem in the first place by distributing your energy demand throughout the day, Tesla just acknowledges the problem (as in human behavior) and deals with it by putting a nice fat buffer battery into your home. Now imagine every household would have one of these, not only would you potentially be able to become fully energy independent on some days of the year. Additionally your energy provider would never have to worry about you adding to the peak demand problem any longer. They could even go as far as remotely managing your capacity and load your battery whenever it fits the grid, they would probably offer you a nice discount on top (actually this has happened in several markets already, but without the battery as a buffer unit, the actual end user experience was very poor — think AirCo does not turn on because you are outside of allowed usage hours).

From a energy grid manager’s point of view this is pretty close to nirvana now: no more peak problems, buffer batteries can be remotely managed and, given you sign that sort of contract, you could even have your battery act as a buffer for other households as well. And the best thing is: the consumers did buy the units all by themselves — no infrastructure investment made whatsoever. There are other discussions that go similar ways like using boat batteries or car batteries as community storage devices. This may sound funny at first, when you think about it a bit longer you will find that a car is usually only used about an hour a day and a boat probably just a few hours at the weekend. Both could be connected to the grid 24/7 which makes then great buffer devices.

So in essence, the Tesla announcement would in fact be quite a big deal (like Nest was) and if they manage to deliver on the customer experience (which they are pretty much known for), I expect to see some nice discount offers from your local energy provider very soon.

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