Tesla’s explanation of its proposal to acquire Solar City, another Elon Musk project, offers a compelling vision: Get energy from the sun, use and store it in the home, charge your car with it. “The world’s only vertically integrated energy company offering end-to-end clean energy products to our customers” will, however, be a very expensive doughnut with an assumption in the middle.

The commercial success of Musk’s vertical integration idea hinges — in terms of turning a profit rather than generating a high market capitalization — on battery technology that would have mass rather than niche appeal. The assumption upon which Musk’s concept — and Tesla’s $32.3 billion market capitalization — is built is that Tesla is betting on the right battery technology and no one will come up with a much better one. That is the big hole in the doughnut: The assumption is far from safe.

Cheap and reliable energy storage is central to the idea of an off-the-grid, solar-powered household. Such a home needs energy at night, when the sun isn’t shining: It has fridges, air conditioners and other appliances running, and a Tesla charging in the garage. So it needs a good battery, and Tesla’s Powerwall doesn’t necessarily fit the bill — if only because the cost of the energy it supplies, including amortization, is higher than grid prices. Because of this, and given the high price of Tesla cars, the lifestyle on offer is an expensive statement. In terms of cost and convenience, it’s not competitive with the traditional grid-and-fossil-fuel model.

Tesla has killed off the more powerful version of the Powerwall due to low demand, and even Solar City has taken some time to figure out how to make its photovoltaic systems work with the battery. Tesla is putting out a new version of Powerwall this year, but it can only be incrementally better than the previous one: Musk doesn’t appear to believe in any battery technology other than the one that powers Tesla cars — the old lithium-ion battery with a liquid electrolyte, in use since the early 1990s.

That’s what Tesla’s “Gigafactory” in Nevada will be turning out, too, when it comes online. Tesla is working on improving it, by using more and more silicon, rather than graphite, in the lithium-ion cell’s anode to increase the cell’s charge capacity. That is a promising path, but battery tech is such a hot field today that hundreds of teams are working on different approaches to making lighter, cheaper, more capacious batteries — and one or several of these may turn out to be more promising.

Nissan, Toyota and Volkswagen, to name just three automakers, are also trying to perfect the lithium-ion cell. Nissan’s approach appears to be similar to Tesla’s. It’s not clear whether the company is already using silicon in the batteries for its new Leaf electric vehicle, but it has already announced that the next-generation Leaf will double the distance it can drive on a charge to more than 200 miles, in line with Tesla’s range.

nissan2Toyota and VW, which in 2014 bought a share in battery tech startup QuantumScape, appear to be working on solid-state technology that would replace the liquid electrolyte with crystal materials. VW has announced plans to build a bigger battery factory than Tesla’s, which suggests it’s confident enough in the tech it has. Dyson, the vacuum cleaner manufacturer which last year acquired a battery startup called Shakti3, has promised to deliver solid-state batteries with double the energy density at one-fifth the cost of current technology.

And then there are all the different approaches to battery tech that are regularly touted as breakthroughs that could change the entire field. To name just a few recent ones, there’s an “aluminum-graphite dual-ion battery” developed by a team in China; sodium-ion batteries from the U.K. company Faradion; lithium-air batteries that numerous teams are working to make commercially viable; and a whole range of other exotic technologies.

Musk said last year that his company was tracking about 60 different efforts around the world to develop better batteries. “We rate all of them from one to five, where five is we should be doing business with them and one is complete BS,” Musk said, adding that he knew of no “fours” or “fives,” just some “threes.” He expressed confidence that if any disruptive technology emerged, it would be offered to his company.

It’s hard to justify that confidence. Bigger car manufacturers have deeper pockets, and, unlike Tesla, which is using stock to buy Solar City, they are cash-rich. Besides, for a truly disruptive battery tech company, there would be a strong temptation to license its technology to several carmakers or raise money to make the batteries on its own. A small firm — like Spain’s Graphenano, for example — could emerge as the owner of the intellectual property that allows for cheap energy storage and fast charging, and it might prefer to own the market while it can rather than work with Tesla the way its current battery partner, Panasonic, does.

A breakthrough, of course, is not guaranteed. It’s more likely that, for the next few years at least, similar technology will be available to several companies. Nissan is catching up to Tesla-Panasonic on electric vehicle batteries, and German-based Sonnenbatterie already sells a home battery that successfully competes with the Powerwall. In this situation, Tesla is not the clear favorite — it has limited experience producing anything at scale and lacks the big cash inflows of its rivals.

Musk has demonstrated a remarkable business intuition and made some bold bets that have paid off so far. Yet the entire structure he has built around clean energy is, essentially, a gamble, albeit an inspiring one.


Between the present and a low-carbon future lies a technically vexing gap — building a better battery. Solar and wind power are cheaper than ever, but the sun doesn’t always shine and the wind doesn’t always blow. More powerful batteries could solve the problem of keeping the lights on, plus expand the market for electric cars by eliminating so-called range anxiety. Battery research today is hotter than any time since Thomas Edison and battery costs are falling faster than many had hoped. But the science is still daunting. There may be limits to how much better current technologies can be, and bolder new approaches depend on big breakthroughs. Price is an issue, too. Wind and solar were helped by tens of billions of dollars in global subsidies of a kind not available for the less-sexy work of storing power.

Most battery research today is focused on squeezing ever more performance out of lithium-ion batteries, which power everything from electric cars to iPhones. Lithium-ion work is seen as relatively low-risk but low return: Researchers are confident that they can grind out incremental improvements but not necessarily much more. General Motors and other car companies are pouring resources into the search, with Tesla Motors hoping to cut the cost of battery packs by at least 30 percent with its planned “gigafactory.” Tesla is also hoping to sell battery packs not just to homeowners but to utilities.

Some of the new approaches use vats of chemicals or liquid metal — tanks that could be made big enough to handle a utility’s needs or balance power use within a local system known as a micro-grid .

Other researchers are looking into different materials like magnesium or at mixing lithium with sulfur to make longer-lasting batteries for electric cars and gadgets. Projects in Spain and Germany use excess electricity to heat gases that later run generators. China is building hydroelectric storage projects in which water is pumped uphill during the day and runs back down through turbines when it’s needed.

The U.S. leads the world in large-scale storage projects using mainstream electro-chemical technology. Since 2011, a 64-megawatt battery facility in West Virginia has helped balance electrical flow in a regional grid serving 13 states.battery2_650px

The Background

Benjamin Franklin and others experimented with Leyden jars, now known as capacitors, which were capable of holding and releasing an electric charge. Alessandro Volta of Italy is credited with inventing the first electric battery, a stack of zinc and copper disks in brine, in 1799. In 1891, the first practical electric car made in the U.S. debuted in Iowa. Thomas Edison set to work building a better alkaline battery for cars, but gave up a decade later after Henry Ford’s gasoline-powered Model T transforms the auto market. Battery research didn’t come back in vogue until the oil shocks of the 1970s, when Exxon created the first rechargeable lithium-ion battery. Sony brought the technology to market in the early 1990s, and lithium-ion batteries have underpinned the digital revolution ever since. They’re remarkably durable, energy-dense and easy to recharge.
The Argument

Lithium-ion batteries can hold more energy than the old dry batteries, but there are physical limits to how much can be pumped in. Even the creator of lithium-ion batteries says he thinks they can probably only become twice as efficient as they are today. Until batteries can store enough power to allow solar or wind to function without a backup power source, fossil fuels will remain utilities’ primary choice. Others argue that the need for batteries is overblown, that renewables can grow significantly just by smarter use of the existing electrical grid. Battery backers are pushing for utilities, regulators and lawmakers to enact rules and regulations that capture the full value of batteries. The cost of producing and distributing electricity is part of the current rate structure but storage isn’t. A renewables-plus-batteries system would make for a much more efficient grid, but utilities are wary of such a drastic change. Battery proponents would like more government backing of lab research in the hope that advances will lure private investment. But with little likelihood of more funding or subsidies, they’re looking for more places to adopt mandates like the one in California requiring utilities to provide 1.3 gigawatts of energy storage by 2020, enough to power a million homes.

The Reference Shelf