What is Elon Musk’s Next Big Announcement?

“For the future to be good, we need electric transport,” said Elon Musk just nine hours ago, “solar power, and (of course) …”

To find out the rest of the incomplete sentence tweeted by the billionaire with 2.01 million Twitter followers, you will have to wait until tomorrow when an announcement is made at Tesla’s Hawthorne Design Studio in California, but actually hints have already gone forth.

What will make the future “good” is being reported to be energy storage systems for home and commercial applications produced as a collaboration between Musk-controlled Tesla and its pending gigafactory and SolarCity.

the missing piece

What is it?

“We will introduce the Tesla home battery and a very large utility scale battery,” says a quote attributed to Tesla’s VP of investor relations Jeff Evanson “confirmed” as authentic by BuzzFeed News. “We will explain the advantages of our solutions and why past battery options were not compelling.”

Obviously Tesla thinks the business case for large banks of batteries that can store energy on site and which dovetail with emerging markets will now be compelling, particularly once the gigafactory starts pumping out gigawatts worth of batteries.

If the venture proves as successful as the Model S at generating excitement, it will have a leg up against other players in an industry projected by Navigant Research to be generating over $68 billion per year in 2024.

What is Elon Musk’s Next Big Announcement?

According to some digging by investment analyst Trip Chowdhry, the Guardian reported Saturday that the Uninterruptible Power Supply (UPS) energy backup system Musk wishes to reveal tomorrow has for over a year been offered to around 300 SolarCity customers.

Musk tweeted this was coming a month ago.

Musk tweeted his next big announcement was coming a month ago.

The big battery housed in an “attractive” dark or white cabinet can serve like an on-site generator would by providing backup for large devices including refrigerators, computers, TVs, HVAC, etc.

Or, it can store and distribute energy when the sun isn’t shining for solar arrays, or when the wind is not blowing for wind turbines.

Affordable?

Some people think the Model S is a bargain, others that it’s too expensive, but to take the sting from what could become pricey batteries in a big box which eventually wear out, it’s believed a creative leasing scheme will be introduced.

Chowdhry told the Guardian the deal offered to SolarCity customers entails a battery costing $13,000. Payment is $1,500 up front plus monthly payments at $15 for 10 years. After this, the battery is returned to SolarCity.

“It’s clean, it’s quiet and it looks good in the garage,” Chowdry told the Guardian while offering it sounded like a good value for a person who would normally spend $100 to $150 per month on data services for phones, computers, televisions and other devices. “This is a speculation on our end, based on what we’ve seen on Tesla battery storage, but so far, this makes sense.”

Whether the announcement tomorrow is for the exact same configuration, or some other products will remain to be seen.

Undoubtedly more will be disclosed.

GigaFactory Enabled

The construction project in Nevada to build the world’s largest battery factory is more than just about enabling the Model 3 and other vehicles.

Tesla-gigafactory-construction-update1
The operation controlled by Elon Musk is to supply SolarCity with cost-effective batteries enabling the move into home storage as well as other commercial applications.

The GigaFactory is set to come online by 2017, and reports have been it is ahead of schedule, and may in by 2016.

Playing To Regulations

A common theme in all of Elon Musk’s business endeavors has been masterfully working with current laws, qualifying for government monies to fund new technology while these new products are simultaneously embraced by new consumer bases.

This has been a source of deep criticism for old-school capitalists saying Musk is a new-school conniver, but for his part Elon Musk has reportedly always been open about it.

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Perhaps it all depends on how you spin it? Or perhaps criticism is well founded? Or perhaps others are envious they did not think of some of Musk’s ideas first?

What ever is true, California has a “groundbreaking” mandate for energy storage in force mandating by 2020 1.3 gigawatts of energy storage to utilities.

The push for residential and commercial solutions by Tesla is right in stride therefore with laws pushing PG&E Corp., Southern California Edison and San Diego Gas & Electric to ante up big bucks as well.

And Tesla is a potential vendor for these captive customers, as well as other markets such as in New York, Bloomberg reports.

“Batteries really are kind of a panacea for the grid,” said Don Clevenger, senior vice president of strategic planning for Oncor. “They provide better reliability.”

So, above home storage, this market worth tens of billions of dollars in the next decade is also about commercial and utility customers.

“Tesla isn’t just going to sell batteries to SolarCity,” said Ben Kallo, an analyst with R.W. Baird & Co to Bloomberg. “They are going to sell to project developers, wind and solar developers, and directly to utilities. The residential product isn’t going to be a huge needle mover, but the numbers are very big on the utility side.”

Not Alone

Another common theme Tesla’s critics may be less likely to trumpet is it is boldly going into an as-yet under developed market.

This has been true for SpaceX collaborating with NASA, SolarCity pushing photovoltaic innovation, and Tesla Motors making electric cars upsetting all the German elites, and making other automakers like GM develop cars to try and keep up.

But as with other industries, the move is not in a vacuum, and other major players Bloomberg observes include Korea’s LG Chem Ltd., AES Corp., and JLM Energy Inc., another startup.

tesla-factory

And just as regulations are helping to enable the enterprise, they will also present a maze of rules to wend through, and a patchwork quilt of varying state rules to either benefit from or potentially be infuriated by.

It’s territory Tesla already is accustomed to however, as its car business is alternately embraced or rebuffed by state car dealer associations or eligible for incentives – or not – as the case may be.

Could this be another big thing for Tesla? Musk – whose tweets have usually been good seems to hint as much.

Today he says he has another piece of the puzzle on par with his other ventures for the “future” to be “good.”

We’ll find out if he’s overbilling it, or on the money tomorrow.