US investment banking giant Morgan Stanley has predicted that big utility companies will have tough years ahead. Cause? Tesla and the increased availability of the solar roof.

The predictions were made in a series of three reports that were published during the past year. The first of them shows that in the foreseeable future, consumers may begin to leave the grid in favor of generating their own electricity.

The first report attributed this to the maturation of consumer solar products, as well as improved and cheaper battery products that can capture and store excess generated energy.

The other two reports, which were subsequently published, confirm previous predictions made in the first report, which was simply titled “Batteries and the Distributed General. Could be a negative for utilities.”

Morgan Stanley expects the cost of solar panels per watt to plummet, from ~$2.00 per watt to just $1.75 by 2018. This is partly due to the significant reduction in installation costs, especially due to the experience and scale of large enterprises. solar service providers such as SolarCity.

They also expect the upcoming Tesla GigaFactory project, which will revolutionize the production of high capacity batteries, will also have a profound impact on the costs associated with storing excess energy generated by solar power.

A major financial institution believes that we can all go offline in the next few years. But how will it happen?

Sun Fight

Solar has a lot. This allows us to produce clean electricity using a source that is guaranteed to never run dry in our lifetime: the sun.

Despite the promise of infinite, clean energy, a number of questions remain which have prevented solar energy from having the same level of ubiquity as fossil fuel energy sources.

First, solar cells generate energy only during daylight hours. During the winter months, this means that electricity is not generated at peak times. It is usually around 5:30 when people leave their offices, return to their homes and turn on the lights when the daylight fades.

tesla solar

Which brings us to the next point. Retaining excess energy is incredibly difficult and expensive. This leaves consumers with two options. They can either sell excess electricity back to the grid or invest in batteries.

There are many products on the market that perform this task, but they are not cheap. They also need to be installed by a qualified technician, leading to further costs to the north.

As a result, solar energy has never replaced traditional methods of electricity generation. However, there are a number of upcoming breakthroughs that look set to change that.

Meet GigaFactory

Tesla made a big announcement this February: Gigafactory. This massive battery factory is joining forces between electric vehicle titan Elon Musk and Japanese electronics giant Panasonic.

The goal of this ambitious $5 billion project is It is so that Tesla can meet the growing demand for its vehicles while reducing costs by producing one of the most expensive and complex components on a large scale.

In a subsequent press release, Tesla indicated that they would provide and operate the building that houses the GigaFactory, while Panasonic would provide the manufacturing equipment used to create high capacity lithium-ion cells.

When construction is finally completed in 2020, the GigaFactory will be one of the few factories in the world that can pump high-capacity batteries in very large quantities. While there is no word from Tesla on how to make batteries for use in cars, it is likely that the battery business will eventually serve home solar users.

tesla car

Morgan Stanley agrees and sees this as a tool to allow consumers to eventually opt out of the energy company. In their report, they wrote:

“…Given Tesla’s Gigafactory and the potential to drive battery manufacturing costs down to $125-$150 per kilowatt-hour of storage capacity and possibly lower, we are seeing customers move off the grid.”

In short, Morgan Stanley believes that Tesla has already fixed one of the problems holding back solar energy. But what about the other challenge of making it financially attractive and accessible to consumers?

Making solar panels more efficient

Another major issue with solar energy is that, on a watt-dollar basis, it is a relatively inefficient means of generating electricity.

One of the problems preventing solar energy from becoming a truly cost-effective energy production medium is that it comes with hefty upfront costs. These systems are not unheard of in the tens of thousands of dollars.

As previously mentioned, Morgan Stanley believes that solar installation companies such as SolarCity can reduce installation costs through economies of scale as well as through more efficient procedures.

tesla solar installation

Efforts are also being made to increase the cost-effectiveness of solar energy by improving the way solar cells are made, as well as by replacing the material used with a cheaper and much more efficient one.

Researchers at the University of Sheffield in the United Kingdom have developed a way to produce solar cells using a new sputtering technology. This ensures that a minimum of material is wasted when creating cells, while also enabling larger scale production using novel new materials such as perovskite,

But why does the material used to build solar cells matter? Well, even the best silicon-based solar cells will only convert about 20% of sunlight into electricity. This is unfavorable compared to hydroelectric plants, which get about 95% efficiency, or coal, which gets about 50%.

Perovskite is a new material that looks set to make solar energy competitive with conventional energy sources. While still in its early stages of development, it is already outperforming traditional silicon cells and is predicted to reach 50% efficiency. This could result in households getting 100% of their energy from a single source — the sun.

Your sunny future is almost here

Paying your utility bill is a necessary part of modern life. But what if it isn’t? What if one day you could call your electricity supplier and terminate the contract, choosing instead to leave it alone.

Morgan Stanley believes this is possible and predicts massive destruction of traditional utility companies, mainly due to the advent of ultra-efficient solar energy and new advances in battery technology.

But will you go off the grid? Let us know! Comment section below.

Photo Credit: Tesla brings the rainbow (Steve Jurvetson).

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