Why Are Tesla Motors Inc (TSLA) Utility-Scale Batteries So Cheap?

Tesla Motors Inc (NASDAQ:TSLA) has figured out how to store energy, especially from intermittent sources, for later use with its portfolio of backup batteries. The company announced two versions of power backup batteries, dubbed Powerwall for home energy storage and Powerpack for utility-scale deployment.

Tesla Motors Inc (NASDAQ:TSLA) also happens to offer the cheapest utility-scale batteries. Its Powerpack battery costs $250/kWh.

Tesla drives down cost of utility-scale batteries

When Oncor Electric Delivery Company commissioned analysts to look into how costs and benefits would turn out if the company installed huge backup batteries on its grid in Texas, the study concluded that the potential benefits of such a move outweigh the costs involved. However, the researchers said that it would be better if Oncor could buy batteries at costs of $350/kWh or less to reap the benefits.

Additionally, the analysts noted that utility-scale batteries cost more, but prices are falling. According to their predictions, the analysts said that with the falling battery costs, it would cost $350/kWh for the cheapest utility-scale battery by 2020. However, with its $250/kWh Powerpack, Tesla Motors Inc (NASDAQ:TSLA) has been able to push prices lower than the Texas analysts expected.

The development also clearly shows how the cost of technology, such as solar and batteries, continues to fall at a time when the cost of extracting fuel is rising.

With the energy backup batteries, Tesla Motors Inc (NASDAQ:TSLA) is hoping to enable homes and businesses to take greater control of their electricity cost. Additionally, the company hopes that the development will accelerate a shift to renewable energy amid rising groundswell against fossil fuels because of the pollution effect.

No need for nuclear plants

Tesla Motors Inc (NASDAQ:TSLA)’s energy backup solutions could also remove the need for new power plants. It is emerging that Tesla’s batteries could actually render new nuclear power builds obsolete on both reliability and affordability fronts. The batteries will also allow for grid optimization storing energy when it is cheaper.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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