Tags: tesla | elon musk | solar power | batteries

Is Tesla's Elon Musk Selling Solar Snake Oil?

By Wednesday, 13 May 2015 10:09 AM Current | Bio | Archive

Tesla CEO Elon Musk has a hit on his hands. With $800 million in orders for his new solar energy storage batteries in only a week, Tesla’s (TSLA) biggest problem now is building them fast enough.

Even more interesting is that $625 million of those orders are for the commercial-scale “Powerpack” units. The buyers reportedly include Target (TGT), Amazon (AMZN) – and electric utilities like Southern California Edison (SCE) and Texas-based Oncor.

So far, utilities seem far more interested in Tesla’s new batteries than individual homeowners are.

This is odd if, as I speculated last week, Elon Musk is driving the electric utility industry toward its grave. What are these companies thinking?

Here’s my guess: the companies looked at the product specs, identified particular uses where the Tesla systems are more cost-effective than the alternatives, and made a logical choice.

Moreover, they did their calculations and placed orders in less than a week, which is lightspeed for corporate purchasing agents. Their haste suggests the financial advantage is very clear and/or the need is urgent.

Whatever advantage these companies see was not so clear to some Newsmax Finance readers. They used last week’s comment thread to say solar energy is wasteful, Tesla’s battery systems are pointless, and Elon Musk is selling snake oil.

I think reality is more complicated. Blanket statements that solar always works, or that it never works, are both wrong.

At least for now, solar energy is cost-effective in some situations and cost-prohibitive in others. The variables include interest rates, roof angles, non-solar power costs, latitude, local climate, electric usage patterns, and more.

An Australian reader made a very intelligent point: solar doesn’t have to be cheaper for people to buy it. They can (and do) have other reasons.

The reader is correct. We make what seem like financially irrational decisions all the time. A Honda Fit and a Cadillac Escalade will both take you from Point A to Point B at the same speed. Yet the Cadillac costs much more. Why does anybody buy one?

It’s their choice. Maybe they like the leather seats or the extra legroom. To them, those features justify the additional cost.

In like manner, people may install home solar energy systems when the financial advantage is small — or even negative — because they see other benefits.

In my case, I’m a conservative who values freedom and self-reliance. I would not mind spending a little more money to get off the grid. If I can do it and actually save money, so much the better, but a lower cost is only part of my motivation.

Here’s a bigger example. The Dubai Electricity and Water Authority is paying a Saudi company $330 million to build a 200-megawatt solar electricity plant. They say its operating cost will be lower than a natural gas-fired plant.

Dubai is well within pipeline distance of massive natural gas reserves. If solar still has a cost advantage there, then I have to think it will work well in other sunny places, too.

The free market will ultimately answer this question. It will answer faster if we get government out of the way. Eliminate all solar subsidies and tax credits, and then we will see what really works.

The world will not abandon fossil fuels any time soon — but solar technology is just getting started. I think it will it will catch up quickly.

© 2021 Newsmax Finance. All rights reserved.

Tesla CEO Elon Musk has a hit on his hands. With $800 million in orders for his new solar energy storage batteries in only a week, Tesla's (TSLA) biggest problem now is building them fast enough.
tesla, elon musk, solar power, batteries
Wednesday, 13 May 2015 10:09 AM
Newsmax Media, Inc.
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved