Finding sources of energy isn't actually difficult. It comes from wind, from water, from the sun, from the geothermal forces in the heart of the planet itself. The trick is holding onto that energy and moving it around, storing it and then delivering it where people need it. That's why carbon-based sources like oil are so great. They're transportable and shelf-stable.

So how will people store and transport energy from renewable sources? Batteries.

Last night, Elon Musk outlined his plan to bring a Tesla battery to homes and offices, generally as an adjunct to solar panels—green energy, on demand. The billionaire CEO unveiled the Powerwall, a battery in 7 or 10 kilowatt-hour sizes. For bigger operations, there's also a 100 kWh unit called the Powerpack. And the Powerwall doesn't just let you bank late afternoon solar for late night bingeing; you can also pull power from the grid during off-peak hours. All this for $3,500.

Battery technology is already pretty robust, but it's never been able to hit such a reasonable price point. "The challenge is to develop a storage system that is economical, with a reasonable payback period for the customer," says Ping Liu, program director at ARPA-E, the government agency charged with developing new sources of energy. The payback period is your savings over time, by weaning your home off Big Grid.

Batteries don't store electricity; they store energy. They do this by keeping two different materials—a positively charged cathode and a negatively charged anode—separated by some sort of non-conducting material, categorically called electrolytes. The electrolyte keeps the cathode and anode from touching, but lets molecules pass through. When the terminals (the ends labeled with + and - signs) are connected to an electrical circuit, a chemical reaction inside the battery forces molecules from the cathode to pass through the electrocyte and into the anode. The anode responds by firing off electrons through the negative terminal, and anything wired into the circuit gets power.

The battery stops making power when there are no more volatile molecules to pass between the two materials. This is why the AA's in your old Sony Discman would go dead. The materials in rechargeable batteries however, can pass volatile molecules back from the anode to the cathode with a little external charge. This restores the imbalance for another round.

Today, lithium-ion batteries are the industry standard for rechargeables. They are in your phone, in your laptop, and if you drink Musk's kool-aid, they are going to be in your home. In the early days of cell phones, Li-ion batteries beat out other rechargeables because they could store more energy longer, while wasting less, without being as heavy. And they could be recharged many times—into the thousands—without degrading. So as cell phones caught on and other electronics devices transitioned into portability, lithium-ion was available.

But lithium-ion has its drawbacks. The batteries are slow and expensive to make, and those costs get passed along to the consumer. Lithium-ion batteries have also been known to overheat, melt, or catch fire—sometimes that's because defects in the battery allow the cathode and anode to touch, and sometimes it's because the batteries generate heat whenever they are being charged or discharged, making it tricky to pack too many battery cores too close together. That's why you can't put gigantic li-ion batteries at the base of every wind turbine to capture the output.

Figuring out a way around this was—and is—Tesla's green energy coup. Instead of trying to use a single big battery, the Model S links together thousands of thumb-sized ones. The risk for overheating is low because no single battery is creating a huge amount of energy. And just in case, the batteries are strung together with a liquid cooling system, and compartmentalized so any fires that do happen won't spread. Tesla also improved the capacitors, inverters, and other parts of the architecture required to move electricity from one place—and state—to another.

The problem with renewable sources of energy is that they work on their own schedule—not necessarily when and where people need the power. Batteries, though, have the potential to close the gap. Musk's system will most likely sit on the far side of the breaker. If you and your house are sucking energy while the sun is up or the wind is blowing, the energy will bypass the battery. And if the battery is full while the renewables are firing, your home system will still be able to discharge back into the grid. And the battery is source-agnostic, which means you can also store energy from the grid, charging up during (cheaper) off-peak hours. And like Tesla's cars, the Powerwall will connect to HQ via the Internet for late-night firmware upgrades.

The lithium-ion cores that charge the Powerwall aren't the only way to store energy. Different chemistries—industry-speak for the materials that make up the battery's interior—could still someday provide better storage in smaller, lighter batteries. ARPA-E is looking at a whole host of other options, including some that use water-based electrolytes. "Not only are these inexpensive, but environmentally benign," says Liu, noting that other batteries have been known to rupture and spew acid. Some are theoretically more promising than lithium ion as solutions for home energy storage, and only suffer because they are so new. "Lithium ion has been on a steady learning curve for a while, and that has largely been driven by its role in industry," says Liu.

And there are plenty of other peripheral areas of research that could improve battery storage. One particularly hot area of research is in wide band gap1 semiconducting materials, such as silicon carbide and gallium nitride, which would eliminate a lot of the energy that is wasted whenever electricity is inverted from DC to AC, as battery-stored electricity must before it can come out of your wall.

And as Elon Musk attempts to move his intervention on our society's oil addiction into the home, he'll need every trick he can get.

1 Correction: 05/12 7:02pm ET. The original article listed these as low band gap. The difference is actually pretty important. Wide band gap materials can handle much higher voltages, about 10 times as much as silicon, before breaking down.