To all the Tesla bulls out there, of which I am certainly one, please know that the Energy market is way more complicated than most of you realize. The Hornsdale project with its 2 year payback is incredibly case-specific and will not be replicated en masse...
IRRs for commercial battery storage are right now lower than the cost of capital for most players (read value destroying) but companies are doing it anyway because they know batteries will play a bigger role in the future...
I’ve heard a lot of people comment on how batteries will replace peakers and that sounds right but it’s not really true. There are all sorts of esoteric revenue opportunities like reactive power and capacity that will be stacked with energy price arbitrage...
To make a compelling case for batteries on the grid. These revenue streams are regional, and the current ISO system will necessitate different strategies in different geographies. On the residential side its way easier to make a case for batteries in regions without net metering
There is a huge amount of potential for Tesla’s solar and storage businesses, but it’s way way more complicated than most people realize. The information gap reminds me a bit of how Wall Street can’t figure out Tesla’s auto business, while some retail investors have cracked it...
The “energy business” is a hopelessly broad term which encompasses power generation, transmission, distribution, ISOs, utilities and consumers. You really need to understand these different players to understand what Tesla is about to do.
