Tesla Is Racing To Be Your Utility Provider
Tesla Motors Inc (NASDAQ: TSLA) has offered to acquire SolarCity Corp (NASDAQ: SCTY) in an all-stock deal valued at $2.8 Billion. Global Equities Research’s Trip Chowdhry commented that Tesla could become a part of almost every household by 2018.
New Utility Provider
“TSLA + SCTY = Power Generation + Power Storage + Power Consumption = Your New Utility Provider,” Chowdhry wrote. He added that the current utilities operational model had become obsolete, and could be reshaped by Tesla.
Utilities take into account the peak loads when sourcing their energy and building their infrastructure, thus incorporating “fundamental inefficiencies” and leading to “over-building” of Infrastructure, the analyst stated. During certain peak days, the on-demand pricing could be as high as $3.25 per Kwh, which is more than ten times the off-peak rate. This happens because Utilities procure expensive electricity.
Chowdhry mentioned that economic benefits could be derived from charging the Li-Ion batteries during off-peak time and releasing the stored energy during periods of peak load.
Touching Every Household
There would be 500,000 Tesla Model 3 vehicles hitting the road annually beginning in 2018, Chowdhry noted, while adding that “the current electric grid does not have the capacity to cater to this enhanced load that would start to happen.”
The analyst commented that from 2018, almost every household could become a Tesla customer, with a Tesla car, a Tesla battery, Tesla solar generation or a combination of these. He added, “Next, we expect TSLA to do something in the Grid as well.”
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