Tesla may have brought the world’s attention to electric cars. But that doesn’t mean its pitch is about the environment the way Toyota’s pitch is with the Prius. Tesla is about the future, barreling toward us on autopilot; we freely associate it with SpaceX and weekend trips to Mars. It’s a brand that stands for charting the unknown, as fast as progress will propel us.

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After all, this is dull stuff. Infrastructure stuff. So maybe you were surprised when Tesla announced the Powerwall, a battery for your home to store solar power, or when it bought the company Solar City, through which Tesla just unveiled a new type of solar roof that looks indistinguishable from a normal one. Or maybe it seemed strange when, in September, the company announced plans to build an 80 MWh Powerpack facility–essentially a building full of Tesla batteries–that will offer battery backup power to 2,500 homes in Southern California. After all, this is dull stuff. Infrastructure stuff. Stuff that couldn’t be further from flying sports cars across the galaxy. Yet these moves cement Tesla’s true identity. Look beyond the performance car brand, and you’ll see a company betting on a future of scarcity–a future where alternative energies become a necessity, because we’re out of everything else. And in this space, Tesla has created what could be the perfect, self-sustaining cross-business structure to balance our energy grid. But the company may have a tough time selling power, as power isn’t really a product. And the old guard of energy? It has actually been moving a lot faster than Tesla’s old competition, the vehicle companies of Detroit. How The 1970s Grid Works At this very moment, your home or office is drawing power from the electrical grid, pulsing through metal wires at a constant 60Hz hum. It is, perhaps, the least exciting–yet most impactful–of human accomplishments, that we can flip on a switch at any moment of the day or night and have the lights come on. But this convenience necessitates the constant choreography of power plants working behind the scenes, turning on and off. Because if power runs low, suddenly your lights no longer turn on. But if the energy in the wires exceeds 60Hz by a significant margin? “We’d blow up power stations,” says Matt Roberts, executive director at the Energy Storage Association. “We’d blow up power stations.” The problem is that our energy needs shift significantly throughout the day and night. When no one is home during the day, air conditioners and televisions run at a minimum. But when people arrive home in the dark, the lights go on, the microwaves thaw dinner, and over the course of an hour, energy needs can double. It’s what the industry calls “peaking.” And when peak energy time hits? Energy companies turn on–or buy energy from–their “peaker plants.” “Usually, they’re old gas turbines,” says George Crabtree, director of the Joint Center for Energy Storage Research at Argonne. Emphasis on old–hundreds of gas turbines in the U.S. are approaching their 50th birthday. They’re also optimized to be turned on quickly; these natural gas plants can start producing energy within as little as five minutes. But they typically run less efficiently than regular power plants–even other gas power plants–that run all day. “A gas turbine you’d use as a peaker plant, might run at 40% efficiency. While the one you’re running 24/7 . . . it’s more expensive, and it doesn’t ramp up and down as fast, but it’s 60% efficient.” In other words, peak power doesn’t just require more electricity; it requires more electricity that’s also produced far less efficiently. “Why don’t you take that 60% efficient plant you’re running all the time, run it 10% higher at night, charge a battery, and use that for peak energy?” Crabtree suggests. A battery backup system would be like a cushion to absorb the impact of peak hours, inflated during the times we can easily have excess.

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It’s an attractive, common-sense idea, which is exactly what Tesla, and others in the industry, are suggesting today. How Tesla Is Rethinking It For 2016 This may or may not shock you, but electric cars aren’t necessarily any better for the environment than gas ones. There may be no smoke puffing out of a Tesla’s tailpipe, but that battery was charged with energy from somewhere. If that somewhere was an old coal power plant? Your Nissan Leaf or Chevy Volt just moved its emissions to a different kind of tailpipe. Batteries actually make more immediate sense on the grid than they do in cars. And that’s because of the scenario Crabtree suggested above–that we can run our most efficient plants harder in the lowest hours, store the energy in giant battery facilities, and then let the grid sip off these batteries during peak loads, rather than firing up more power stations. “We want to run the grid like a laptop,” says Roberts. “You get power from the grid when you can. Otherwise, there’s a battery.” “I think the closest analogy is refrigeration to the food system. Now you can slaughter your beef whenever and refrigerate it.” The benefit of batteries only grows when you consider the implications of solar. In California, panels provide almost 10,000 megawatts of power, or the equivalent of a few nuclear reactors–much of it from private homes. Not only does solar energy itself peak at midday, during a time when the grid can’t very well utilize it, but all this energy has to go somewhere–again, lest reactors start blowing up. As a result, gigantic lithium ion battery facilities, capable of offloading excess grid power in mere milliseconds, start to make a lot of sense. “I think the closest analogy is refrigeration to the food system,” says Roberts. “Now you can slaughter your beef whenever and refrigerate it. The same thing with energy. You can make energy when it makes the most sense, emissions, cost, whatever your motivations are. And you hold it until you need it.”

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Such massive battery installations might sound wild–it would take something like 200,000 Macbook Pro batteries to power Tesla’s new backup facility in California–but in fact, they’re an old idea, born anew with technology. We’ve actually been storing excess energy for over a century in the still waters of mountain lakes, and the pools behind dams. Called “pump hydro power,” water pumps relocate water when energy is flush. And when it’s low, we open the flood gates and let gravity push water through turbines to create energy. In fact, about 2% of the U.S.’s total energy is stored at any given time in pump hydro systems–the “water batteries” conceived by our clever forefathers who were raised on the promise of public works projects rather than seasonal Apple events. But pump hydro’s applications are limited. The response time is slow, and you’d want to exploit the energy for a day or so to make the efforts worthwhile. And while we have pump hydro stations across the U.S., not every part of the country has a conveniently located mountaintop lake to store excess water, waiting to be released for gravity to turn into energy. Lithium ion technology promises to fix every weakness of pump hydro, because it stores and releases energy instantaneously, while offering a technology that could scale from mega power facilities down to individual units inside your home (that a power company might even pay to install and control). Batteries can fit everywhere! Because batteries scale small to large so easily, it’s no wonder that Tesla is approaching home owners with its personal Powerpacks, as well as city-scale grids with its giant energy storage facilities. The Car’s Role In The Smart Energy Grid However, while every energy expert I talked to seemed convinced that all these grid batteries are our future, how quickly this future will arrive is up for debate. The first question is, can we make enough batteries? It turns out that we can: Argonne has done deep analysis on the topic, from sourcing the lithium to the rarer metals that might be used like cobalt or nickel. “It looks like there’s not supply problem with material, as far out as 2050, when you’d hope there’s new tech being developed,” says Linda Gaines, transportation system analyst at Argonne. The lithium is easy. The metals, which are harder to come by, can actually be recycled into new batteries. It’s even conceivable that you could take a battery from an electric vehicle, like a Tesla, and after its capacity dwindles, 8 to 10 years into use, it could be given a second life inside a battery backup plant, where performance requirements are much lower.

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Tesla’s multi-tentacled technology creates a supply-and-demand ouroboros across its businesses. While experts I talked to believed this reuse approach was technically feasible, Tesla’s CTO has made public statements that he’s more interested in just recycling the batteries instead. Either way, it demonstrates the shrewdness of Tesla’s multi-tentacled business plan. While it lacks the scale of energy industry mainstays like AES—a Fortune 200 company that is actually building a battery backup facility in L.A. that is larger than Tesla’s!–it has an end-to-end, supply-and-demand ouroboros across its businesses: Tesla’s solar roofs feed Tesla car batteries that feed Tesla energy facilities that we need mainly because Tesla solar roofs are producing so much clean power that the grid can’t accommodate it any other way. If we indeed get 2 billion vehicles on the road by 2035, and electric cars continue to grow in market share, the world will soon be full of old batteries that will need to go somewhere. Tesla could have a backup battery plant that takes them as-is to live a second life. Meanwhile, all that solar energy shining down from Tesla Solar Roofs funnel into these backup battery plants–plants we need simply to stop the grid from overloading from all that solar! The power goes straight back into Tesla cars–which incidentally, could also be used as a fleet of smart batteries to draw and provide power to the grid. (Nissan is actually piloting such a program with its Leaf EV.) You can almost read this future in the tea leaves of Elon Musk’s most recent master plan: Create stunning solar roofs with seamlessly integrated battery storage

Expand the electric vehicle product line to address all major segments

Develop a self-driving capability that is 10X safer than manual via massive fleet learning

Enable your car to make money for you when you aren’t using it Musk is simply savvy enough to not use the words “grid” or “recycle,” which are dull compared to “stunning,” “self-driving,” “massive fleet learning,” or “make money.” Rajit Gadh, UCLA professor and founder of the school’s the Smart Grid Energy Research Center, has 100 EV charging stations set up on a mini grid around campus. There, he has successfully proven that using such hookups, we could siphon energy from cars directly into homes. Tesla’s solar roofs feed Tesla car batteries that feed Tesla energy facilities that we need because Tesla solar roofs are producing so much clean power. “These vehicles sit around 80% to 90% of the time. I’m excited about those batteries,” says Gadh. Indeed, the smallest Tesla battery of today could power a home for two days. If the grid just sipped on the energy of those parked cars now and again, the added capacity to the entire grid could be enormous, and EVs may be able to absorb the needs of peak demand.

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Tesla has teased that its customers may soon be able to lease out their cars during the day as self-driving Uber vehicles to make back some cash. In reality, a Tesla that could cushion the grid through its cars is far more immediately feasible, technologically and as a business plan. You’d just plug your car in at home or work and set its battery to grid mode, knowing it may give and take energy at the grid’s will–maybe offering the driver cash or a home energy subsidy as a result. Tesla Is Selling A Product, Not A Service It’s a utopian energy vision, the sort of idea that, even if Tesla doesn’t have the scale of a GM to make cars or an AES to make battery facilities, at least cements the company as the perfect figurehead for a new era of distributed energy. But the problems are many. Experts I talked to don’t doubt Tesla’s vision–again, Tesla isn’t an outlier, many energy companies are launching even bigger battery backup facilities–but they do call into question the immediacy of change. That’s because energy isn’t seen as a product. It’s considered a service. So even though Tesla might woo us with the promise of our car charging our home, at the end of the day, flipping on the lights is flipping on the lights. And people just want to do it cheaply. Lithium ion is never going to be half as expensive, or a third as expensive, as it is today. Take the promise of lithium ion batteries themselves, an energy storage solution often touted as becoming so inexpensive that they’ll grow completely ubiquitous. That’s likely not true, at least not at the Moore’s Law pricing scale. “There’s a big difference between the price of a diesel generator and a lithium ion battery of any kind, whether it comes from Tesla or not,” says Crabtree. An individual homeowner would be far better off spending one-fifth the price on fossil fuel backup for their home than Tesla’s Powerwall. “That’s the same bottom line. There’s other ways to do it. Of course, a diesel generator doesn’t behave the same way, and puts out smoke and mist. There are other reasons [you’d want the battery] than just money. But the money reason is a big one. Lithium ion is never going to be half as expensive, or a third as expensive, as it is today . . . I don’t think the price is going to come low enough to make it a no-brainer.” And by that, Crabtree means a no-brainer at the grand grid level, or the inside-your-home level. “It’s a sliding scale,” Crabtree continues, alluding to the 24-hour cycle of energy demand. “My guess is that lithium ion, or something less expensive, would be able to compete at the peak market.” In other words, the price of lithium ion facilities might only be justifiable for a few hours a day. And if it only makes sense a few hours a day, it might not make sense at all.

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“Cost is not the challenge. It’s value,” says Roberts of how the energy industry views energy production. “An energy storage system isn’t competing with a coal plant to generate energy. What it’s competing with is the service that’s provided. A megawatt for an hour, instantaneous response, whatever that service is, that’s what storage is competing with. It’s a nuance. But it’s an important nuance to how this works.” In other words, just like cheap gasoline keeps drivers from making the plunge on a battery-powered vehicles, so too can cheap energy keep many markets from taking the plunge on battery-powered plants. Of course, there is one big factor that will eventually make a move to batteries a necessity. We will run out of natural gas. Regulation could kill coal once and for all. Our natural resources are not unlimited, and as we move toward a scarcer world, storing every extra bit of power to munch on later will be a vital way of life. Our world will soon be stricken by omnipresent drought, including large swaths of the American West. As for existing solutions–like those pump hydro plants–they’re not immune to climate change. Massive parts of our world will soon be stricken by omnipresent drought, including large swaths of the American West. Roberts points out that in Brazil–the second biggest producer of hydroelectric energy, powering two-thirds of their grid with the technology–energy output is dramatically down as it’s faced the worst droughts in 40 years. “What they’ve seen from the drought is the water level keeps dropping and dropping behind their dams. They don’t have as much force to drive the turbine. Some dams have to be shut down,” he says. “In that regard, as we’re trying to manage water vs. energy . . . a drought is not helpful to a hydro system.” Make no mistake. A grid that runs just like your laptop is unavoidable. Almost since the rise of electricity, we’ve used batteries to store and stabilize our power. First it was stored in water. Now it’s stored in lithium ion. Eventually, it will probably be one of many battery competitors in research today, like lithium metal or aluminum graphite, that charges faster and has capacity that dwarfs today’s technology.

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Indeed, if talking to so many energy experts taught me anything, it’s that Tesla has a remarkable, feasible vision for the future of energy. But the most incredible part about it is that Tesla’s vision isn’t as unique as it might seem. The company is chasing the same future its competitors are chasing, making our battery-powered grid inevitable. It’s only a question of when. And in markets like California, that when is actually today.