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The Powerwall’s Implication On The Electric Utility Industry

Tesla (NASDAQ:TSLA) recently announced a revolutionary energy storage product called the Powerwall, which comes in a 10 kWh model for $3,500 and a 7 kWh model for $3,000. The Powerwall was significantly more cost-effective than most were expecting, with some even predicting prices north of $10,000 as a best-case scenario. The degree to which industry experts got their predictions wrong is indicative of the incredible progress being made in the energy storage industry. Clearly, Tesla’s massive involvement in the energy storage industry has accelerated progress in a momentous way, which has huge ramifications for a number of industries.

The industry that should be most threatened by this progress is the centralized electric utilities industry. Most energy analysts have assumed the solar plus storage model as a faraway threat for the utilities, which was an assumption predicated on the belief that cost-effective battery technology is nowhere near mature. With Tesla’s new Powerwall product, these assumptions have been shattered. While the Powerwall is still not cost-effective enough to cause mass defection from the grid, it highlights the huge and attainable potential of energy storage technology. This means that centralized utilities such as PG&E Corporation (NYSE:PCG), Edison International (NYSE:EIX), etc, are looking at a much bleaker future.

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