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How Tesla's new battery may revolutionize energy consumption

Tesla is expanding its business beyond luxury electric cars and looking to power homes and businesses with renewable energy stored in batteries. Will Tesla's experiment prove successful?

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Elon Musk, CEO of Tesla Motors Inc., unveils the company’s newest product, Powerpack in Hawthorne, Calif., Thursday, April 30, 2015.

Ringo H.W. Chiu/AP

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Elon Musk wants you to buy a battery, whether you put it in a Tesla or not.

This past Friday, the Tesla CEO unveiled a series of standalone Powerwall batteries, an energy-storage solution that he says is not only the future of the company, but of energy consumption.   

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Expanding its business beyond luxury electric cars, Tesla is launching Tesla Energy and Powerwall batteries, with which it plans to power the world’s homes and businesses with renewable energy.

“We’ve obviously been working on building a world-class battery, a super efficient and affordable way to store energy,” Khobi Brooklyn, a Tesla spokeswoman, told the New York Times. “It’s just that we’ve been putting that battery in cars most of the time.”

Tesla is far from the only company to come up with this idea. But its car sales give it the purchasing power to buy the materials needed to produce batteries more cheaply than competitors can. And with the Gigafactory – a $5 billion, 10-million-square-foot, battery building facility in Nevada – Tesla will be able to produce them in mass quantities.

The batteries will be marketed in different sizes, including 7, 10 or 100 kWh, marketed to homes, businesses and utilities. These batteries, which begin at $3,000, will allow customers to store energy collected from solar panels. With a backup supply of energy, customers can avoid increased cost of electricity peak energy times, and still have energy in the case of a power outage.

The current energy industry is intrinsically linked to consumption, with utilities producing exactly what their customers need at a given moment and not storing excess energy, a model that compels power companies to charge more during peak hours.

While utility companies can burn more coal, the sun and the wind cannot be conjured up in the same way. To truly ever be independent from coal, there must be a way to store their power for use under dark skies and in still air, which is what Tesla hopes its batteries will provide. 

This will almost certainly promote the use of renewable energy, but the question is, will it actually save people money? Some are skeptical.

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Many utility companies give those with solar panels the opportunity to sell excess energy back to the grid. As the industry currently stands, this profit generally makes up for the cost of paying for the energy at night.

Utilities in over 20 states are currently working to change this so that there will be incentive for customers to keep, rather than sell, excess energy.

The battery, like Tesla’s other wares, will likely initially remain out of reach for all but the most affluent customers. But Tesla's forceful arrival to the battery market should drive the prices down for their own and others’ lithium-ion batteries, as well as bring attention and investments to the industry.

“We saw the same thing in solar, the cost of panels came down quickly,” CODA Energy’s CEO, Paul Detering told Wired Magazine. “The winning bet was to drive the industry costs down rather than trying to do it yourself.”

Interested customers can currently reserve a Powerwall and deliveries and installations are slated to begin this summer.

“Our goal here is to fundamentally change the way the world uses energy,” Musk said during Thursday’s Tesla Energy event. “At the extreme scale.”