Storage: Great For Oil and Electricity

Driving the marginal cost of energy toward zero is happening. Oil is plunging and storage is filling up. The Energy Dept reports that: Crude oil inventory data for the week ending February 20 show that total utilization of crude oil storage capacity in the United States stands at approximately 60%, compared with 48% at the same time last year. Most U.S. crude oil stocks are held in the Midwest and Gulf Coast, where storage tanks were at 69% and 56% of capacity, respectively, as of February 20. This capacity use calculation reflects only crude oil stored in tanks or underground caverns at tank farms and refineries. And, in electricity, the storage of which can save consumers substantially, we are finding costs are diving. A Comprehensive Look At Tesla's Home Batteries shows: When attached to solar panels, home batteries store energy that can be used in emergencies, such as power outages, or on a regular basis. Continuous battery use slashes utility bills by reducing dependence on the "grid." Grid electricity is expensive during power spikes, which occur when motors in major appliances are turned on, and during peak demand periods. Home batteries could significantly cut into the generator market with revenues of $16 billion, but more importantly, they seem to be the ultimate solution for storage of excess energy harnessed by solar panels. However, the author concludes that Tesla's product just won't cut it in this market: Musk's other companies, including SolarCity, are poised to benefit from a transition to independence from utilities, but it seems that Tesla will not. The promise of a Tesla Model S home battery may hold sway over investors, but is unlikely to hold sway over consumers who can purchase less expensive alternatives from other car companies and affordable power storage system companies.

Posted in: Wall Street Trading