Tesla’s New Battery Is Not A Breakthrough Not that useful for US users, way too expensive for emerging markets

WASHINGTON – A fancy press release and a well-advertised CEO press conference are not good  substitutes for introducing real innovation. Tesla’s founder Elon Musk announced that his electric cars company will soon start selling batteries that can store renewable energy for home use and beyond.

Batteries will store power

According to Musk, these state of the art batteries will allow people who have solar panels at home to safely store the excess energy they produce, this way diminishing and potentially eliminating their reliance on the grid when there is no sun light, or when power outages may occur.

Game changer?

For a moment, I thought this was a breakthrough, a real game changer. Well, it is not. Quite possibly it is an advancement in the ongoing efforts, pursued by Tesla and others, to come up with integrated renewable energy systems that will make users totally energy self-sufficient, at a reasonable cost.

This is worthwhile goal. But Tesla’s new batteries do not get us there. The main reason is that they are still rather expensive. The price tag is $ 3,500 per item, to which you have to add converters and other parts, plus the cost of installation. And why would you buy this package? The reason is that when there is no sun, or in case of power failures, you will be fine, because you will no longer depend on electricity supplied by your local utility through the grid.

Why buy these batteries?

This is interesting, but I seriously doubt that it will motivate many average consumers. The fact is that the cost of this total autonomy is still relatively high. Besides, the grid, whatever its many imperfections, is usually reliable. Why spend all this money to protect yourself from the inconvenience of a power cut due to bad weather?

Of no use in developing countries

More broadly, for the moment at least these incremental innovations do not even begin to address, let alone solve, the massive problem of lack of power in large parts of the developing world.

Consider this. In sub-Saharan Africa about 585 million people do not have any electricity whatsoever. Even in Kenya, a country that is doing relatively well compared to others in Africa, only 23% of the population has electricity. In neighboring Tanzania the percentage goes down to 14.8%.

Lack of power means that hundreds of millions of Africans are also cut off from real economic growth opportunities. I cannot think of anything valuable that can be done without any electricity.

It would be nice if Tesla had come up with innovation that could help solve this gigantic problem –lack of power– that represents the single largest obstacle to development. But we are not there.

Way too expensive

I do not believe that a subsistence farmer in rural Kenya will be able to pay around $ 5,000 for a battery, and all the other parts that go with it, in order to get full cycle solar electricity, (assuming that he already has solar panels). The idea is good. The prices are still astronomically high for developing countries users who need affordable power the most.

I would imagine that at some point there will be breakthroughs. At some point someone will come up with solar panels that people making a few hundred dollars a year can afford. This is not impossible. But we are not there yet.

Tesla’s announcement made me dream for a moment. But then I realized that this is mostly hype. This innovation will have little use in mature economies, and it is totally out of reach for emerging markets users.


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