Tesla document reveals surging energy storage market

Source: Christa Marshall, E&E reporter • Posted: Thursday, April 28, 2016

Likely sales of Tesla batteries to just one solar company this year could be 60 percent larger than the entire U.S. “behind-the-meter” energy storage market last year, said a new report by GTM Research.

Even though the analysis focused only on Tesla Motors Inc.’s sale of high-capacity batteries to SolarCity Corp., GTM Research executive Shayle Kann said results were noteworthy. He pointed to Tesla likely being the country’s top stationary battery supplier and SolarCity its top customer. Tesla CEO Elon Musk is SolarCity’s chairman.

Kann said the research signaled ongoing growth in the U.S. behind-the-meter storage market, which refers to systems on an owner’s property rather than on the electric grid or utility side.

The study also shows that Tesla’s recent discontinuation of its 10-kilowatt-hour home battery was not a sign of any broader growth challenge for storage batteries in the United States, said Kann. The report, he said, is “indicative of the overall growth of the market.”

GTM analyzed Tesla’s April 15 definitive proxy statement document. Based on last year’s revenues, the firm concluded the company sold about 26 megawatt-hours of storage to SolarCity last year.

In comparison, GTM research estimated behind-the-meter sales to SolarCity this year to reach 116 MWh, a more than 300 percent increase. All U.S. behind-the-meter deployments last year reached about 71 MWh.

“These are, of course, just estimated based on projected revenue. Regardless, they indicate a behind-the-meter energy storage market poised for major growth in the U.S.,” said Ravi Manghani, a senior energy storage analyst for GTM.

Tesla currently sells the 7 kWh Daily Powerwall battery and larger Powerpack battery, which can be used for commercial behind-the-meter applications.

In March, Tesla discontinued the 10 kWh version of its Powerwall because of lackluster customer interest, raising speculation of unrealistic expectations in the energy storage market (Greenwire, March 24).

Kann, however, said the 10 kWh battery wasn’t as attractive economically because it was a backup battery that had competition from cheaper backup generators, among other factors. As a daily cycling battery, the other Powerwall model is still experiencing strong growth, he said.

More broadly, falling battery costs, improved technologies and new financing options are driving growth this year, said Kann. He noted that SolarCity offers customers an option in some states to finance battery storage and solar panels together, helping drive interest.

In March, the Energy Storage Association reported the U.S. energy storage market surged 243 percent in 2015 — its best year of all time. Within that, the behind-the-meter market, including residential and nonresidential “behind-the-grid” sectors, grew 405 percent in 2015.