Tesla Motors batteries aren't just for electric cars anymore

Tesla Motors has teamed with SolarCity on a solar-powered battery system for businesses. By bundling SolarCity solar panels with Tesla Motors batteries, the companies aim to offer businesses onsite electricity during power outages or peak demand when energy is expensive.

Tesla Motors, the company that has jolted the electric car industry, is looking to change the way we power business.

The California-based firm has teamed with SolarCity, a solar-energy company, to back up commercial solar systems with the electric carmaker's advanced lithium-ion batteries. The system, called DemandLogic, debuted Thursday and is initially available only in parts of California, Massachusetts, and Connecticut.

The project is a convergence of two clean-energy giants on an issue that has long hampered the spread of renewable electricity.

The sun doesn't always shine, the wind doesn't always blow, and it's costly to store either of those renewable sources. That's why most residential and commercial solar systems simply feed electricity back into the grid, rendering them useless if the wider grid fails. 

Finding an inexpensive and effective way to store that energy where it's collected would be a key step for renewable energy system. But storage systems are traditionally expensive and it's unclear whether businesses will be willing to pay the upfront cost for the long-term benefits of onsite storage.

“Time is money, but so are control and predictability," Peter Rive, SolarCity’s chief technology officer, said in a statement. "Our storage systems can give businesses the tools to address all three – delivering immediate savings, protection against escalating demand charges and optional, grid-independent backup power in case of outages.” 

Severe weather caused an estimated 670 widespread power outages between 2003 and 2012, according to the White House. Those outages cost the US economy an inflation-adjusted annual average of $18 billion to $33 billion, accounting for everything from damage to the grid to lost productivity.

What's more, utilities are increasingly charging businesses and other customers more for electricity during times when demand peaks. Onsite storage would help energy-intensive businesses avoid those costs.

A string of recent crash-induced battery fires in Tesla Motors electric cars may scare off some customers. Stationary batteries are much less vulnerable to accidents than those in motion, and investigations into the fires have yet to uncover any systemic flaws. But the incidents may make investors think twice about investing in complicated battery technology.

If the SolarCity-Tesla Motors collaboration works, it could mark a major step forward for an unglamorous and obscure, but vital technology. The two companies already are testing a storage system for home solar in California. The two companies overlap – Elon Musk, the chief executive of Tesla Motors, is SolarCity's chairman and a cousin to SolarCity Chief Executive Lyndon Rive.

The two are tapping into what many see as an emerging market. Worldwide sales of advanced batteries totaled $10.8 billion in 2012, according to a report released Thursday by Navigant Research, a Colorado-based energy consultancy.

“While traditional lead-acid batteries still reign in the automotive starter and uninterruptible power supply markets, each of the major new markets for batteries – automotive traction, stationary energy storage, consumer electronics, cordless power tools, medical systems, and defense systems – favors advanced batteries, which offer superior performance in the areas of cycle life and energy density,” Sam Jaffe, senior research analyst with Navigant Research, said in a statement.