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5 Things You May Have Missed About Elon Musk's Tesla Battery Announcement

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“The sun shows up every day and produces ridiculous amounts of power.” —Elon Musk, May 1, 2015

Elon Musk produced fireworks last week when he announced that Tesla, his company known for its high-end electric cars, will soon start selling batteries to power homes and businesses. The products—which run about $3,500 for Powerwall home systems and about $25,000 for Power Pack business systems—will likely start shipping to customers later this year. The home system will store 10 kilowatt hours of electricity, enough to power a household for several hours.

Here are five important things you may not have seen about the Tesla announcement:

1. Consumers will save money on electricity.

According to Kimball Musk, Tesla board member and brother of Elon, the system could save consumers up to 25 percent on their electric bills. He explained that instead of paying premium electricity rates in the afternoon in a place like California, the battery will charge itself in the middle of the night when electricity is cheapest. "Electricity is only getting more expensive. So any way we can store it and become more self-reliant, that's ultimately a good thing," said Julien Gervreau, whose winery business has been piloting battery use for energy storage.

Thus, depending on electricity rates, the pay-back period could be only three to four years. In a place like Hawaii, where electricity rates are much higher than the national average, the pay-back will be even faster. Several states with net-metering laws will even allow solar consumers to sell the excess power stored in their Powerwall back to the utility.

2. It will hasten a widespread switch to renewable energy

If utilities use these battery systems, as some have already announced they will do, it will allow them to better shift the load of electricity use throughout the day when the sun isn’t always shining and wind isn’t blowing -- thus giving utilities the ability to integrate more renewables into the grid. “Storage is a game changer,” Tom Kimbis of the Solar Industries Association told The Washington Post.

According to The Los Angeles Times, Tesla will get a boost from the California Public Utilities commission, which has ordered Edison, San Diego Gas & Electric and Pacific Gas and Electric to install or contract for more than 1,325 megawatts of electricity storage throughout the state by 2020, creating a huge market for batteries.

3. It will allow electric car and solar customers to drive on more sunshine. 

Electric vehicles (EVs) are already lower in emissions than conventional vehicles, even taking into account the emissions from the electricity used to charge them and even in parts of the country with dirty grids. But to go the extra green mile, of the more than 300,000 people in the U.S. who drive plug-in EVs, a significant number of them have solar panels on their homes—upwards of 32 percent according to one California survey.

One program—a collaboration among Ford, SunPower and the Sierra Club—provides a discount on this combination of EVs and photovoltaics. However, the solar energy only powers these EVs some of the time, since the sun isn’t always shining. Tesla’s new battery system will allow consumers with any type of rooftop solar and any type of plug-in car (not just a Tesla model) to store their solar power and use it to power their cars more frequently, making it easier to truly drive on sunshine. This is why Slate Magazine posited that Tesla's new home-based battery "can truly liberate eco-minded drivers from fossil fuels."

4. It will mean battery prices will drop even faster. 

Large batteries are key to electric cars and energy storage systems for homes, businesses and utilities, but cost has been a challenge. Sam Wilkinson, research manager for solar and energy storage at HIS Technology, told Wired that he anticipates a 50 percent battery cost drop in the next two to three years. Meanwhile, battery efficiency is growing at about eight percent annually.

A recent Washington Post article cited myriad reasons why "powering your home with batteries is going to get cheaper and cheaper"—among them the ongoing construction of Tesla's "gigafactory" in Nevada, expected to begin production in 2016 and reach full capacity by 2020, at which point it will produce more lithium batteries annually than were produced worldwide in 2013.

5. Companies are already raising their hands to buy and sell these battery systems.

Big companies such as Walmart and Cargill have already started to partner with Tesla to power their operations with the new PowerPack battery in conjunction with rooftop solar. Tesla batteries already power 11 Walmart stores, and the Jackson Family Wineries in Northern California started installing Tesla's battery storage systems last fall at all eight of its wineries. And just last week, Austin, Texas-based Treehouse home improvement store announced that it will be the first retailer to carry the new Tesla home battery.

Musk said he wants to make batteries a core part of Tesla's business, with the ultimate goal of transforming the world's electric system. He emphasized that as with its electric car systems, Tesla will have an "open patent" policy—meaning that other companies wishing to join the battery revolution don't have to start from scratch. He said at the Powerwall unveiling, "We are hopeful that many others will follow our path and if somebody is able to make a better battery solution than us, I'd be the first to congratulate them."

Gina Coplon-Newfield is the director of the Electric Vehicles Initiative for the Sierra Club.

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"This hasn't happened in 150 years or more," said Daniel Swain, a climate scientist at UCLA's Institute of the Environment and Sustainability to The Guardian. "There have even been a couple [of] wildfires – which is definitely not something you typically hear about in the middle of winter."

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On Thursday, the U.S. Drought Monitor said nearly 60 percent of the state was abnormally dry, up from 46 percent just last week, according to The Mercury News in San Jose.

The dry winter has included areas that have seen devastating fires recently, including Sonoma, Napa, Lake and Mendocino counties. If the dry conditions continue, those areas will once again have dangerously high fire conditions, according to The Mercury News.

"Given what we've seen so far this year and the forecast for the next few weeks, I do think it's pretty likely we'll end up in some degree of drought by this summer," said Swain, as The Mercury News reported.

Another alarming sign of an impending drought is the decreased snowpack in the Sierra Nevada Mountain range. The National Weather Service posted to Twitter a side-by-side comparison of snowpack from February 2019 and from this year, illustrating the puny snowpack this year. The snow accumulated in the Sierra Nevadas provides water to roughly 30 percent of the state, according to NBC Los Angeles.

Right now, the snowpack is at 53 percent of its normal volume after two warm and dry months to start the year. It is a remarkable decline, considering that the snowpack started 2020 at 90 percent of its historical average, as The Guardian reported.

"Those numbers are going to continue to go down," said Swain. "I would guess that the 1 March number is going to be less than 50 percent."

The National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center forecast that the drier-than-average conditions may last through April.

NOAA said Northern California will continue deeper into drought through the end of April, citing that the "persistent high pressure over the North Pacific Ocean is expected to continue, diverting storm systems to the north and south and away from California and parts of the Southwest," as The Weather Channel reported.

As the climate crisis escalates and the world continues to heat up, California should expect to see water drawn out of its ecosystem, making the state warmer and drier. Increased heat will lead to further loss of snow, both as less falls and as more of it melts quickly, according to The Guardian.

"We aren't going to necessarily see less rain, it's just that that rain goes less far. That's a future where the flood risk extends, with bigger wetter storms in a warming world," said Swain, as The Guardian reported.

The Guardian noted that while California's reservoirs are currently near capacity, the more immediate impact of the warm, dry winter will be how it raises the fire danger as trees and grasslands dry out.

"The plants and the forests don't benefit from the water storage reservoirs," said Swain, as The Mercury News reported. "If conditions remain very dry heading into summer, the landscape and vegetation is definitely going to feel it this year. From a wildfire perspective, the dry years do tend to be the bad fire years, especially in Northern California."