Why You Might Buy Electricity From Elon Musk Some Day

In California, homeowners are pulling the plug on their utilities by storing solar electricity in Tesla batteries. 

At first glance, there’s nothing particularly Jetsons-like about Marco Krapels’ 1940s-era home in a prosperous suburb that lies in the shadow of Mount Tamalpais in Marin County, California. Open the garage door, though, and it’s Tomorrowland.

Attached to the wall is a charging station for Krapels’ Tesla Motors Model S electric sports sedan. And next to the charger are two metal boxes that effectively render Pacific Gas & Electric, the 108-year-old utility that serves Northern California, irrelevant. One box channels electricity generated by the SolarCity photovoltaic panels on the house’s roof. The other, a 10-kilowatt-hourTesla lithium-ion battery pack, can store up to three days’ worth of carbon-free electricity generated by Krapels’ solar array. 

In other words, during the sunniest part of the day, when no one is at home and power demand is low, the Tesla battery pack can store the excess electricity for use in the late afternoon and evening when power prices spike. No dirty and expensive utility electrons needed.  “I should technically be able to function with solar and just the battery indefinitely as long as the sun shines,” says Krapels, a renewable energy financer.

And the cost? Thanks to California incentives that subsidize 60 percent of the cost of energy storage, Krapels is paying less than $40 a month for the battery pack as part of a lease deal with SolarCity, the Silicon Valley company that installed the solar battery system.

“To be able to make my own power and store my own power and use it when I want to is liberating,” says Krapels as he stands in his garage. “I don’t want to have to buy power from PG&E at peak rates, I want to use my own power. You see this power line going from the street to my house? I look forward to the day when I cut that wire.”

But that day has not quite arrived. The Tesla energy storage unit – it’s is a smaller version of the battery pack that powers the Model S – has sat unused since it was installed in Krapels’ garage last spring. PG&E, like other big California utilities,  has refused to connect residential solar-battery storage systems to the grid unless homeowners pay a fee that can run $800 or more.

That fee fight is a fig leaf for a much bigger struggle that is unfolding over who will control the production and distribution of energy in the US – old-line monopoly utilities or a new generation of green tech companies like SolarCity and Tesla that put that power in the hands of their customers.

“Utilities are not a massive fan of people being able to disconnect from the grid,” Peter Rive, SolarCity’s co-founder and chief operations officer told The Atlantic. “But just trying to fight energy storage and kill it is going to backfire on them.”

The trend in so-called distributed generation is being driven by the plummeting price of solar panels, the growing production of advanced batteries for electric cars and government regulators who have imposed mandates on utilities to buy an increasingly percentage of the electricity they distribute from renewable sources. In October, California regulators ordered the state’s three big utilities to obtain technology to store 1,325 megawatts of electricity generated from wind, solar and other renewable but intermittent sources of energy.

That’s spawning innovation in an industry that has long seemed stuck in a technological time warp. Stem, a Silicon Valley startup, for instance, is installing $100,000 54-kilowatt-hour lithium-ion battery systems in hotels and other businesses to allow the storage of electricity when prices are low to avoid high rates utilities charge commercial customers when demand spikes. NRG Energy, meanwhile, is testing a device that will let homeowners generate their own electricity from natural gas.

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Todd Woody is an environmental and technology journalist based in California. He has written for The New York Times and Quartz, and was previously an editor and writer at FortuneForbes, and Business 2.0.

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