Last night, Tesla CEO Elon Musk finally unveiled the company’s new stand-alone batteries. The idea is that you’ll be able to store renewable energy, such as solar, so that you can power your home or business even when the sun isn’t shining.

Tesla is far from the first company to offer batteries that do this. But thanks to its car business, it has the scale to buy the parts its batteries need for less than its competitors can. And thanks to its planned 10-million-square-foot Gigafactory, the company has more capacity to assemble batteries than anyone else.

If Tesla really becomes the energy storage powerhouse it hopes to be, the way we all think about and use batteries could change in a basic way. Competitors are eyeing Tesla’s play to see if it hastens the day when large-scale energy storage batteries become commodities, as interchangeable as the AA batteries you throw into your cart in the checkout line. Many believe that day is coming soon—even as they predict the days of battery innovation are far from over.

Not the Battery, But What You Do With It

To Raghu Belur, co-founder of solar power systems company Enphase Energy, there’s little question that batteries will become commodified. “Absolutely without a doubt,” he says. “Drive down the Valley and you’ll probably find 50 companies working on different chemistry.”

He compares the fate of batteries to that of solar panels themselves, which have become dramatically more affordable in recent years. “When we entered the market in 2006, there was a lot of focus and investment on the panel,” he says. “Eight years down the road, panels are commoditized, and the intelligence is in everything but the panel.”

The winning bet was to drive the industry costs down rather than trying to do it yourself. CODA Energy CEO Paul Detering

The real differentiation will be in how those batteries are designed and integrated into an electrical system, he says. Enphase’s strategy is to make everything smaller and more distributed. Instead of one big power converter and one big battery, the company has opted to build smaller batteries and converters onto each panel. That means that if one component fails, the others will keep working. Plus, Belur says, the smaller components are easier to install and are much safer.

Enphase’s ideas are just one possible way that renewable energy systems will be integrated into homes and buildings, and there’s room for many other variations. That, Belur says, is where to expect the next innovations.

Battery Smarts

Energy storage company CODA Energy offers large storage systems to commercial buildings and manufacturers, just as Tesla plans to do. Its CEO, Paul Detering, agrees that the batteries themselves will just play one part in defining the shape of the future energy storage landscape. Among the most important elements, he says, will be the tech to which the batteries are attached.

Detering’s company, for example, doesn’t sell its systems; instead, it installs and maintains them at its own expense, and then charges customers for the energy they use (much like Musk-backed Solar City does with solar panels for residential customers). To make such an arrangement economical for both sides, it software algorithmically determines peak energy times, when electricity is more expensive, and switches customers’ buildings over to stored energy during those peaks. Customers end up paying less during the peaks while sharing some of that savings with CODA.

Detering thinks that ancillary tech such as software, as well as business model differentiation, will be key points of differentiation for the energy storage market. At the same time, he still thinks batteries will evolve. Although Detering says CODA’s technology is “chemistry agnostic,” he thinks battery chemistry will continue to be an important factor. “It will be quite a few years before that combination of technology, science and, quite frankly, art commoditizes,” he says.

Better Batteries Through Chemistry

Even if traditional lithium-ion batteries like the ones Tesla uses do become everyday commodities, other new types of batteries could make the marketplace even more competitive. Companies like Imergy Power Systems, just a few miles down the road from Tesla’s car factory east of San Francisco, for example, and China’s batteries made from the element vanadium.

John Lemmon, a program director at the U.S. Department of Energy’s Advanced Research Projects Agency-Energy, says vanadium batteries last far longer than traditional lithium-ion batteries because the chemical process that the batteries rely on don’t require the materials they’re made of to degrade. The upshot is that the batteries can last, in theory, for decades without needing to be replaced, Imergy president Tim Hennessy says.

Competitors are eyeing Tesla to see if it hastens the day when large-scale energy storage batteries become commodities.

That’s a big win for the environment because it means far fewer batteries to dispose of or recycle. It also means the batteries could end up being cheaper over their total life than batteries with a cheaper up-front cost, according to Hennessy.

Meanwhile, companies like Fuji Pigment are working on aluminium-air batteries, for example, that could be cheaper and far more efficient than lithium-ion batteries.

But it could take a while for demand for non-lithium batteries to ramp up. And even though Tesla’s Gigafactory won’t be complete until 2016, competitors will also have to build manufacturing plants in order to compete with Tesla’s scale. That means that we’ll probably see a mix of many different battery technologies on the market for the foreseeable future, each of them seeking to strike a balance between power and price.

Better and Cheaper

What just about everyone agrees on is that Tesla entering the market will be a good thing. Obviously, the company has already brought more attention—not to mention investment—to the battery market. In seeking to become a major player, Tesla will bring down the costs for not just its own lithium-ion batteries, but for lithium-ion batteries as a whole, CODA’s Detering says.

“We saw the same thing in solar, the cost of panels came down quickly,” he says. “The winning bet was to drive the industry costs down rather than trying to do it yourself.”

And more competition will mean more innovation—especially if Tesla holds true to Musk’s promise, re-emphasized last night, to open its patents to the world. Better, cheaper batteries appear to be on the way—and more power to them.