Tesla Faces Stiff Competition In Energy Storage War

By Irina Slav 

Tesla

A week after Tesla announced it had won a tender for the installation of the world’s biggest battery storage system in Australia, Siemens and AES launched a joint venture that focuses exclusively on battery storage systems. The first comments from observers suggest that this joint venture, called Fluence, could turn into stiff competition for Tesla, and there are facts to support this suggestion.

Tesla has 300 MW worth of battery-powered storage systems across 18 countries. AES and Siemens boast a combined 463 MW of such projects across 13 countries. Tesla has a gigafactory and plans to build three more. AES has a decade of experience in energy storage systems, and Siemens has more than a century of experience in all things energy technology as well as an established presence in over 160 countries around the world.

It certainly looks like the energy storage sector just got a lot more exciting. Bloomberg’s Brian Eckhouse quotes AES’ chief executive, Andres Gluski, as saying that energy storage is “the holy grail for renewables.” Gluski is certainly right: the biggest hurdle for the wider adoption of renewable energy in the past has been the lack of reliable energy storage capacity that would solve the pesky intermittency challenge that is inherent in solar and wind power generation.

With battery-based storage, renewable energy will receive a major boost; there’s hardly any doubt about it. According to Bloomberg New Energy Finance, while there was 4 GW of battery-based storage capacity installed by the end of 2016, it is estimated to reach 45 GW by 2024.

There are three drivers to this increased adoption: reliability, sustainability, and affordability, as expressed by Siemens’ head of energy for the U.S. and Canada. This is what led Siemens and AES to join their forces, in fact, or, as Gluski put it to Green Tech Media, “We have to massify this product to continue to bring down costs. On long-duration systems, we think we’re the most competitive in the market, but we’ll be even more competitive if we’re even larger.”

Given the experience, reputation, and international presence of the Fluence partners, the company could indeed become a serious challenge for Tesla, and it’s not going to be the last one.

New markets in high-growth industries tend to be very attractive, and while they start with a couple or a few solid players, in just a few years they usually see an influx of newcomers. This is what happened in the 3D printing space not so long ago: with patents expiring and open-source innovation rife, the industry that many believe will change the world is now crowded.

Battery-based storage systems have their own world-changing potential, including significantly reducing the use of oil and gas for power generation. For now, Tesla, AES and Siemens, as well as any smaller storage system developers, have enough space to compete without stepping on each other’s toes. How long this will continue depends on how quickly other players start to consolidate or how quickly they come up with systems that are reliable and cheap enough to compete with the BatteryPack and the combination of AES’ Advancion and Siemens’ Siestorage platforms. In any case, energy consumers will be winners. The oil and gas industry, however, might have a problem on its hands, particularly those in it that rely on gas for power generation to stay in business.

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