One of the world’s largest buildings is currently under construction, and it will be dedicated to the production of batteries… including home batteries. You’ve heard of it; the Tesla Gigafactory, Tesla motor’s new $5 billion factory, which among other projects, will be home to the Tesla Powerwall home battery, a home battery that has already made a huge splash in the residential energy storage world. We’ve written a lot about the Powerwall home battery, as well as the Tesla Gigafactory, but the latest media tour of the Gigafactory left with some big news about the future of home battery costs. Tesla says that making lithium-ion home batteries on such a massive scale will result in a huge reduction of home battery costs. That’s not only great news for Tesla, but great news for home battery buyers, too.
How huge of a home battery cost reduction are we talking about? Get ready for this: Tesla CEO Elon Musk said the factory would reduce home battery costs by more than a third by 2018. This is great news for home battery buyers, and not as far-fetched as it might sound at first. The Gigafactory construction is going forward at a furious pace, and by working together with Panasonic, Tesla has been able to seal up humidity-controlled rooms that will allow them to start making home battery components before the end of the year. The cost of home batteries, and lithium-ion batteries in general, has fallen dramatically as demand continues to rise along with production, and as the Powerwall home battery continues to be a major focus of Tesla’s they are expected to keep falling.
Musk has shown that he’s very excited about the home battery branch of his business. He said recently that the Powerwall home battery business will make up about a third of the Gigafactory’s output right from the start. Eventually, Musk expects that around a half of the entire Gigfactory will be working around the clock to produce more and more home batteries.
The very name of Tesla’s home battery factory, the Gigafactory stems from “giga,” the unit of measurement that represents billions. One gigawatt hour describes the generation of one billion watts per hour. Tesla says that the Gigafactory will be producing 35 gigawatt hours of batteries, including home batteries, by 2018. To put that in perspective, this is about the equivalent of the entire world’s battery, including home battery, production in 2014. And this isn’t even the full potential of the Gigafactory: Musk says that the Gigafactory has the potential to produce 150 gigawatt hours if the demand for batteries and home batteries continues to rise. That is almost three times more energy than the entire city of New York uses per year… but in battery storage capacity.
Almost doubling the world’s production of lithium-ion batteries, including a huge rise in the production of home batteries, is a bit of a risk, but it’s a risk we are glad Tesla is taking. In a way, its the same risk that every home battery owner takes when they purchase their first home battery: they believe in home battery technology. They know that home batteries work, that home batteries give you control of the way you store and use your own energy. They know that home batteries are the best solution to the problem of solar power’s intermittency. They know home batteries are great protection against the power grid’s vulnerabilities. If all these things are true, then why are home batteries a risk, you ask? In a way, home battery purchases aren’t very risky at all, but if you’re looking for a home battery to give you an immediate economic return on your investment, you are taking a risk, for now. But because Elon Musk is taking the same risk with home batteries but on an even bigger scale, you are in good company. You’re also with a company that is completely changing the home battery game, and bringing home batteries into mainstream in an unprecedented way. Soon, the last last sliver of risk in the home battery investment won’t be a risk at all.
Elon Musk says that he thinks that there are even more Gigafactories in store for Tesla’s future, as he predicts that Tesla will continue to have to grow to meet the public’s need for home batteries. He thinks other home battery companies will be looking to ramp up their home battery production with gigafactories of their own.
“It makes sense to have a gigafactory in Europe, one in China, one in India -- wherever there is a huge demand for [home batteries],” Elon Musk says. How huge is the demand for home batteries? According to Musk, demand for home batteries is “crazy off the hook.” Demand for home batteries is so high, that Musk says the entire Gigafactory could dedicate all of its production to home battery products in order to meet it. When the Powerwall home battery was introduced last year, Musk told the press that there was no way that the company could satisfy all of the home battery demand, and that they were basically sold out of all of the home batteries they had until this year.
Though the demand for home batteries is high in the United States, then home battery demand is off the charts in countries like Australia and Great Britain. It was in these countries that Tesla initially debuted the Powerwall home battery because of the huge demand. Australia is currently in the midst of a home battery revolution, with the debut of the world’s biggest “virtual power plant,” which is actually a network of connected home batteries. The chief executive officer of the Australian Renewable Energy Agency says that the home battery revolution in Australia is due to the falling costs of home battery technology. Australians are taking power away from the utilities, and putting it in their own hands with home batteries. Using new information technologies and home batteries together, individual consumers get to manage when and how electricity is delivered to their households. Another Australian energy expert, Andy Vesey, said that home batteries will “demonstrate alternative ways to manage peaks in energy demand, contributing to grid stability.” Since the power grid continues to show us its [vulnerabilities](https://www.swellenergy.com/blog/2016/08/06/disabling-the-power-grid-and-life-as-we-know-it-is-easier-than-you-might-think], power stabilitiy through home batteries is a welcome thought.
Though Australia may be a head of the United States in home battery installation now, the continuing decline in home battery prices is sure to boost the number of home battery purchases and home battery installations in the coming year. That is, as long as Tesla, along with other home battery manufacturers, can keep up with home battery demand. Swell is excited to continue partnering with home battery companies to provide energy security and battery storage to everyone, helping to lead the home battery revolution here in Southern California, and beyond.