In Focus: Tesla and SolarCity’s Home Energy Storage Play

Have electric carmaker Tesla and solar power installer and financier SolarCity cracked the financial code for backing up residential rooftop solar panels with household batteries?

Over the past year or so, the two companies have been quietly installing Tesla’s lithium-ion batteries to back up SolarCity’s solar panels. That’s no secret — SolarCity advertises its home energy storage system on its company website.

But battery backup for solar panels has been too expensive to justify for all but the wealthiest of homeowners. Simply put, batteries are too expensive, and the price of power too cheap, to justify the expense.

That’s too bad, because battery backup could really help solve some of the larger-scale problems associated with connecting lots of intermittent, on-again, off-again solar power to the grid. Energy storage could help mitigate the distribution grid voltage sags and surges that can occur when clouds pass over neighborhoods with lots of rooftop solar, for example. It could also help shift stored solar power to cover peak loads that may occur slightly later in the afternoon than solar’s peak production times.

Enter the Tesla-SolarCity technology combo. So far, the two companies have submitted about 70 applications to Pacific Gas & Electric under California’s Self-Generation Incentive Program (SGIP). That program offers credits for on-site generation sources like solar power, biogas digesters and fuel cells. Starting in 2009, SGIP started offering credits of $2 per watt for energy storage systems that can store power from an eligible on-site generation system and discharge it at rated capacity for a four-hour period.

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