Tesla has continued to grow its energy storage business, but is also seeing a continued slide in slow solar power deployments per its First Quarter 2018 update.

The company appears to be on target to triple its 2017 energy storage deployment volume of 410 MW. The company is also optimistic about its solar business, and the company’e quarterly letter to shareholders says that Tesla expects to “experience mild growth for another quarter or two before our revised sales strategy starts to show its full impact in final deployments”.

At one point in yesterday’s investor call, Elon Musk also suggested that a gigawatt sized energy storage system will be announced within the next few months.

But despite Tesla’s rosy view, we’re still seeing solar power deployments fall. The 76 MW installed in Q1 is Tesla/SolarCity’s lowest level since the 78 MW deployed in Q3 2013. The last twelve months saw approximately 448 MW of solar power installed – also a low since 2014, when 429 MW was deployed.

The Buffalo Gigafactory was not mentioned, nor were Solar Roofs talked about on the investor call, as most attention was on the Model 3 ramp. The investor letter does, multiple times, reference the second half of 2018 being an important time for solar power to scale.

The company noted that a ‘significant part’ of its customer base is holding off on installing their residential solar power systems, until they can install a PowerWall alongside their solar. This aligns with market research suggesting 74% of solar power customers are interested in energy storage, but also Tesla’s emphasis on energy storage.

Tesla has also continued to push away from the solar leasing business, with cash and loan system sales making up 66% of residential deployments in the quarter, an increase from 31% in Q1 2017 and 9% in Q1 2016. Those percentages mean cash and loan sales were 50 MW of total solar, leaving under 26 MW of solar leasing in the quarter.

But in contrast with the lull in solar deployment, energy storage is on a definite upswing.

First quarter volume was boosted by the huge Australia 100 MW/129 MWh being officially applied to the books. The quarter recognized 373 MWh deployed – just short of 2017’s total volume deployed of approximately 410 MWh. The first quarter numbers were a 161% increase over the Q4 2017, and 621% larger than Q1 2017.

The company said it has a significant backlog of PowerWall orders, and on the conference call suggested that product demand wasn’t the issue.

This was right around when Elon suggested that a 1 GWh energy storage system may be announced sometime in the coming months. As there have been no official announcements of a 1 GWh energy storage system, this might become be the first. There have been 1 GWh+ energy storage bids, but no projects this large awarded to date.

Total revenue for the energy generation and storage division was up significantly, despite the fall in solar deployment. And despite the increase in direct sales versus third party solar, profit margins in the division are tight. This may reflect slim profitability in company’s energy storage sales.

With the company hoping to triple its 410 MWh of battery storage deployed in 2017, and being on pace with a great first quarter, there is some energy storage light at the end of the tunnel clearly visible.

However, the solar power story is still unfolding and it seems the second half of 2018 will be when we see whether or not Tesla can deliver on its promises of renewed growth.