Elon Musk says electric utilities should stop fretting that Tesla’s new home battery will hurt their business, and instead embrace the growing trend toward solar power generation.
Speaking at the Edison Electric Institute’s annual industry conference Monday, Musk sought to reassure utility executives that they have nothing to fear from consumer use of the Powerwall home battery, adding that a larger version of the battery could even help them improve efficiency, Bloomberg reports.
The batteries, which can be used with both wind and solar systems, allow users to store excess power that can be tapped when power consumption exceeds production—usually when there is a lack of sun or wind. (RELATED: Solar Subsidies Could Let Musk Double Dip)
Musk is the CEO of Tesla Motors as well as the chairman of SolarCity, the nation’s second-largest seller of solar panels. Powerwall batteries are widely seen as a way to benefit both businesses by boosting demand for solar panels.
Tesla also offers a larger version of the Powerwall for use in industrial applications, and Musk predicted that utilities would eventually account for between 80 and 90 percent of Powerwall sales as they shift toward greater reliance on renewable sources for energy production.
Critics, however, contend that the prospects for solar power depend heavily on government subsidies, and expect that enthusiasm for the Tesla battery will dissipate. (RELATED: Solar Industry Demands Extension of Subsidies)
Bob Lutz, a Via Motors board member and former vice chairman of General Motors, told CNBC Monday he “can’t understand the fascination” with the batteries.
“I think [the battery] is greatly overvalued because having batteries as backup storage has been around for hundreds of years,” Lutz said, adding that he believes Tesla’s share price will return to normal following a 25 percent boost triggered by the release of the Powerwall.
Moreover, federal subsidies and tax credits alone provide just under $7,000 out of the $23,000 average cost of a rooftop solar system, while state and local subsidies offset the cost even further, according to The Hayride, a political commentary blog based in Louisiana.
In Louisiana, which has among the most generous solar subsidy programs of any state in the country, taxpayers absorb about 80 percent of the cost of rooftop solar, even though the state’s climate is not especially conducive to the technology.
Indeed, former Ohio Treasurer and Secretary of State Ken Blackwell asserts in an op-ed for Townhall that, “Very few people would install these rooftop solar systems at all if not for the federal tax break that comes with it,” which takes the form of a 30 percent non-refundable tax credit known as the solar investment tax credit (ITC).
Even the Solar Energy Industries Association, a national trade group, acknowledges as much on its website, noting that, “the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006.” (RELATED: Europe’s Green Energy Industry Faces Collapse as Subsidies are Cut)
Musk, however, countered in an interview with CNBC last week that criticism of the subsidies is “misleading and deceptive,” saying their purpose is not simply to make businesses profitable, but rather to serve as “catalysts that improve the rate at which a certain thing happens.”
“They cause this good thing that voters think is good to happen faster than might otherwise [be the case],” Musk explained.
After being in business for a decade, though, both SolarCity and Tesla continue to report annual losses, begging the question of when, or even if, the companies will ever be able to operate profitably on their own.
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