The vast potential of solar power is something that I’ve blogged about many times – for instance here and here. However, I’ve also acknowledged the biggest problem with the technology, i.e. the Sun’s regular habit of going away for the night.

Below a certain level of take-up, this is a non-problem. No form of generation is 100 per cent reliable and modern power grids are designed to adjust accordingly. But with take-up on the rise, the technical challenges multiply – and, whether or not grid stability is truly under threat, the established utilities have an excuse for obstruction. As long as householders and businesses depend on the grid for security of supply (and as a buyer for their excess solar power), connection charges and other measures can be used to hold back the competition (if the regulators allow it).

But what if solar panel owners could store their electricity for later use? That, would alter the equation – enabling householders and businesses to go off-grid – or, at least, to deal with grid operators on more equal terms.

As used to be the case with solar panels, it was assumed that affordable battery-based storage systems were still years away from coming to market. But earlier this month, Tesla – a manufacturer of electric cars – unveiled the ‘Powerwall’ a battery-based system for residential use:

Writing in the Washington Post, Vivek Wadhwa sets out the key details:

“The Powerwall is available in two configurations: 7kWh and 10kWh. The larger unit provides the backup power needed if the grid goes down. Tesla says that the 7kWh Powerwall is sufficient for daily use. It is selling the units to installers for $3,500 for 10kWh and $3,000 for 7kWh. There is no indication of what the installation costs will be, but they should not be substantially more than those of the charging stations for electric vehicles: in the region of a thousand dollars.”

This isn’t exactly cheap, but according to an otherwise sceptical piece by Jeff St. John for Greentech Mediait’s cheaper than what many people thought possible at this stage:

“Turns out that Tesla is pricing its Powerwall batteries much cheaper than anyone predicted – $3,500 for a 10-kilowatt-hour unit, and $3,000 for a 7-kilowatt-hour unit. That’s the price to the installer, which means a markup before it gets to the customer, and it doesn’t include the inverter. Still, it certainly beats the price point pegged by most analysts as competitive – under $1,000 per kilowatt-hour to get their foot in the door, and about $500 per kilowatt-hour to become widely cost-competitive.”

Moreover, battery systems – like solar photovoltaic panels – are on a downward cost curve. Even without big technological breakthroughs, iterative improvements and economies of scale are driving down prices.

As featured before on the Deep End, Tesla is in the process of building a vast new factory that will more than double current global production of lithium-ion batteries (not just Tesla’s global production, all global production). It is calling this facility Gigafactory 1, which suggests that further massive investments are on the way.

With other manufacturers also investing in the overlapping solar, battery and electric car sectors, it’s hard to see why these technologies shouldn’t carry on getting cheaper.

This, for the most part, is a happy prospect – but not for the traditional utilities. Indeed, a huge question mark hangs over their long-term future.

Given our climate, Britain is unlikely to be the first part of the world where solar becomes fully cost competitive. On the other hand, with a comparatively liberal energy market, this may be one of the first places were private investors take serious fright.