Aiming high

The Los Angeles Times reported that “Musk introduced a new line of residential and commercial batteries [recently] in a dramatic announcement at the automaker’s design studio in Hawthorne. He outlined a vision of off-the-grid homes and businesses and remote villages powered by sunshine.”

According to Musk, the Times recounted, the new initiative reflected an ambition “to change the fundamental energy infrastructure of the world. What we will see is something similar to cellphones and land lines where cellphones actually leapfrogged land lines.”

Target and Walmart stores have already begun testing the devices, which could dramatically change the way they power their enormous, warehouse-like commercial spaces.

Regional rivals

The move rippled swiftly through Silicon Valley, where Tesla has become the most prominent, but hardly the only, battery purveyor in town. In a demonstration of PayPal founder Peter Thiel’s theory that innovators should seek monopolies, not marginal improvements, competition has ratcheted up in the power-storage space, as Business Spectator noted, because the market has not yet matured:

“‘So many companies are fighting over a market that’s practically nonexistent right now,’ said Haresh Kamath, energy storage expert at the Electric Power Research Center in Palo Alto, California. ‘Tesla is betting they can produce a charismatic product that consumers will want to buy — like what Apple did with the iPhone.’ Tesla will have to sell eight home battery systems to equal the size of each battery pack going into one of its luxury cars, he said.”

West coast dominance

In a potent sign of the business importance of location and tech infrastructure, California quickly emerged as the introductory market for top-tier firms taking advantage of the new batteries. As VentureBeat reported, “Amazon Web Services, the largest public cloud around, has started a pilot of the new stackable battery units Tesla unveiled[.]”

“‘We’re excited to roll out a 4.8 megawatt hour pilot of Tesla’s energy storage batteries in our U.S. West (Northern California) Region,’ James Hamilton, distinguished engineer at AWS, said in a statement in press materials for today’s product launch. ‘This complements our strategy to use renewable energy to power our global infrastructure.'”

Solidifying California’s significance in the battery market, solar power firm SolarCity — co-founded by Musk’s cousin, Peter Rive — also announced plans to use Tesla batteries to share revenues with customers whose homes are connected to the power grid.

“SolarCity’s financed battery-solar residential system offerings will include a standard customer contract that ‘essentially splits revenues that grid services provide,’ he said,” according to GreenTechGrid.

And though both firms have benefited from millions in subsidies granted by the Self-Generation Incentive Program established by the Golden State, GreenTechGrid noted, Rive insisted that, “for this product, we are not counting on any SGIP incentives whatsoever.”

Nevertheless, state regulators’ impact on energy markets appeared set to influence the tech business in other ways. In yet another extension of Tesla’s power on the west coast, the company’s former senior finance director, Ryan Popple, recently secured “a $3 million grant from the California Energy Commission to help set up a manufacturing plant in Los Angeles County” for Proterra, the electric bus company where he has become CEO, as Government Technology reported.

“Popple says rechargeable buses have benefits that diesel can’t match, especially in California. By 2030, Gov. Jerry Brown wants to cut in half the state’s use of oil for transportation. And California’s urban areas, particularly the Los Angeles region’s massive sprawl, constantly struggle with air pollution. Electrifying public transportation within cities would be a substantial step forward, Popple said.”

Beyond federal and state efforts, California’s tech titans have upped the ante with momentous new investments that promise to revolutionize electricity production.

For years, solar power has been touted by advocates as a major future source of “alternative energy.” Most recently, fresh off promising Californians a measure of federal drought relief, U.S. Interior Secretary Sally Jewell debuted Desert Sunlight. It’s a new 4,000-acre solar energy “farm” in the hot and dry outer reaches of of Riverside County and one of the largest such projects in the world.

But as the Los Angeles Times reported, the farm “opens at time of uncertainty for future utility-scale solar development in California, which has been slowing in recent years as federal assistance begins to disappear and investor interest fades.”

Meanwhile, Silicon Valley has turned its attention to solar power. Despite the prospect of a 20 percent drop in federal investment tax credits, tech entrepreneurs have taken steps to scale solar power use in a way that promises almost immediate results.

First Solar

USA Today reported First Solar received nearly $1.5 billion in federal loan guarantees to build out Desert Sunlight. But now priorities are shifting.

According to Market Watch, First Solar just inked a huge new deal to supply power to tech behemoth Apple Inc.:

“Apple committed $848 million for clean energy from First Solar’s California Flats Solar Project in Monterey County, Calif. Apple will receive electricity from 130 megawatts (MW)AC of the solar project under a 25-year power purchase agreement (PPA), the largest agreement in the industry to provide clean energy to a commercial end user.”

Although Apple CEO Tim Cook heartened environmentalists by casting the decision as a blow against climate change, it was ultimately driven by a simple imperative: making a good business bet.

“By 2016,” Mother Jones noted, “solar is projected to be as cheap or cheaper than electricity from the conventional grid in every state except three.”

In a substantial irony, Silicon Valley observers pointed out solar power has benefited greatly from rising costs for traditional energy, which California’s emissions law drives upward. As the Silicon Valley Business Journal observed:

“Chris Shea, who heads up the Silicon Valley territory for Livermore-based installer Solar Universe, a SolarCity competitor, said the industry has had a tailwind thanks to rising rates for conventional power. ‘Going green is a secondary benefit of the whole thing,’ he said. ‘Ultimately, it’s, “How do I get my cost of living down?” We’ve seen, since we started, almost a doubling of electrical cost that PG&E charges even to their lowest tier,’ said Shea, who employs about 20 out of his Santa Clara office.”

Solving the storage problem

SolarCity, one of the most important players in the industry, also recently figured into a massive new technological twist on alternative energy. Although state and federal regulators had pushed Americans to buy zero-emission cars, the technology faced a simple problem: battery life often didn’t measure up to what drivers’ hopes.

Now developments in car batteries are spreading to other areas of life that use batteries.

Tesla Motors CEO Elon Musk has partnered with SolarCity with an eye toward revolutionizing storage capacity — a challenge to the landscape dominated by public utilities. SolarCity, run by Musk’s cousin Lyndon Rive, has begun to install Tesla batteries.

And The Verge reported Musk and Rive have gone public with their big plans to scale stored solar energy well beyond cars:

“Musk and Rive mentioned that every SolarCity unit would come with battery storage within five to ten years, and that the systems would supply power at a lower cost than natural gas. Those batteries will come from the [Tesla] gigafactory, currently being built in Nevada. Once the factory comes online, the strong demand for energy storage will allow it to immediately ramp up production and achieve economies of scale. Tesla CTO JB Straubel (who has said that he “might love batteries more than cars”) says that the market for stationary batteries “can scale faster than automotive” and that a full 30 percent of the gigafactory will be dedicated to them.”

California officials, The Verge pointed out, have set out a policy goal of 1.3 gigawatts of storage by 2020.

The way things are turning out, it may be the private sector, not government-subsidized projects, that charges the electric future.