Has Tesla finally done it? Has it finally plucked out the long-standing thorn in the side of renewable energy – the need for cost-effective ways to store electricity? With the announcement of the Powerwall storage system, Elon Musk & Co would certainly like us to think that they have.

There is a lot to admire about the Powerwall, at least as it was first presented. It’s small, sleek and clearly designed with aesthetics in mind, not unlike the game-changing hardware produced by that other hot California technology company.

This is not my father’s propane backup generator, which sits in a big box a hundred feet from his house. It is definitely not the diesel generator we had when I was a kid, which looked like (and basically was) a mutant lawnmower engine.

Tesla said the price for the batteries alone is a few thousand dollars but the total is substantially higher when installation and an inverter to make household AC power out of battery DC power are included. Partner SolarCity said it will sell the battery pack for $7,410 or lease it over nine years for $5,000.

To add to the excitement, one utility, Green Mountain Power in Vermont, announced it would be happy to sell the Powerwall directly to its customers. This is a sign not only that utilities are taking the potential of the Powerwall seriously, but that they may be trying to figure out a way to profit from potentially disruptive technologies. (Full disclosure: Green Mountain Power has funded some of my university research in the past.)

But for all the buzz around Powerwall, home batteries – even sleek, more-affordable ones – face some hurdles. Unlike a shiny new iPad or iPhone, batteries are still a long way from becoming the next must-have consumer item.

Who will bite first

The Powerwall is most likely going to see its biggest initial domestic sales in the same markets that other energy storage companies are targeting – Hawaii, California, New York City and military bases. California is currently a hot market for energy storage because of how the state has chosen to subsidize energy storage technologies. Tesla has already been a big beneficiary.

These subsidies, however, can and do disappear sometimes. As this article reports, California is mulling significant changes to its energy storage subsidy scheme. When they do disappear, so can the value of the technology being subsidized. Just ask the providers of “demand response,” whose revenue streams for peak-time electricity reductions were severely disrupted by a successful court challenge to the pricing system established by federal regulators. The Supreme Court has agreed to take up this case, but the regulatory uncertainty has already affected business models and the functioning of regional power markets.

To keep prices down, Tesla as well as current and future competitors will have to spend lots of time and money lobbying the state to keep the subsidy system in place.

States with a large difference between peak and off-peak prices, including California again, are also a good potential market for low-cost home energy storage. Charge at night when electricity is cheap and discharge during the day when it’s expensive.

This “energy arbitrage” strategy, however, has never worked for the energy storage industry, and it’s unlikely to work for the Powerwall either. The type of charge/discharge cycle for energy arbitrage would probably affect the long-term health of the battery system, meaning more frequent replacement (Tesla is saying that the Powerwall will have a warranty of ten years, though on what terms we don’t yet know).

With enough battery energy storage following the energy arbitrage model, the cost of grid-produced power during the day would plummet because of lower demand. And the cost of power during the evening would rise due to higher demand for charging. On a pure cost basis, this would eat away at the large price differential that built the energy arbitrage idea in the first place.

Moreover, potential buyers seeking to integrate the Powerwall with solar photovoltaic (PV) systems wouldn’t even follow the energy arbitrage strategy; they would do exactly the opposite, charging from rooftop PV panels during the day and discharging at night. Even in California, the economics of doing this, versus just leaning on the power grid at night, are pretty rotten.

Paying for backup

Tesla is also trying to sell the Powerwall as a reasonably priced form of backup power, in case of emergencies on the grid. (Remember Hurricane Sandy, anyone?) While it remains to be seen whether it can compete with other backup generator technologies, this customer segment is, in some sense, just what Tesla needs: high-income households to serve as early adopters because they can afford to place a premium on having electricity service during blackouts.

The Powerwall, for all its novelty, is a reminder of how energy storage is still ripe for maturity and how, as an industry, it is still searching for the right business model.

As these articles show, the costs of energy storage are falling dramatically, although the “balance of systems” costs, which include the inverter, other equipment and installation, still have a ways to catch up.

Even so, energy storage has got to move beyond simply lowering energy cost to have broad market viability. The fall in the price of computers and smartphones was itself revolutionary because these devices did things that nothing else could. In the developed world where the centralized grid is already present and usually reliable, there are plenty of alternatives to the Powerwall and its competitors.

This article has been updated with the latest available pricing information. To read more about the changing electric grid, see:

• Why rooftop solar is disruptive to utilities – and the grid

• Tesla batteries: just the beginning of how technology will transform the electric grid

Seth Blumsack is Associate Professor at Pennsylvania State University.

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Self-driving cars are expected to revolutionize the automobile industry. Rapid advances have led to working prototypes faster than most people expected. The anticipated benefits of this emerging technology include safer, faster and more eco-friendly transportation.

Until now, the public dialogue about self-driving cars has centered mostly on technology. The public’s been led to believe that engineers will soon remove humans from driving. But researchers in the field of human factors — experts on how people interact with machines — have shown that we shouldn’t ignore the human element of automated driving.

High expectations for removing human drivers

Automation is the technical term for when a machine – here a complex array of sensors and computers – takes over a task that was formerly accomplished by a human being. Many people assume that automation can replace the person altogether. For example, Google, a leader in the self-driving car quest, has removed steering wheels from prototype cars. Mercedes-Benz promotional materials show self-driving vehicles with rear-facing front seats. The hype on self-driving cars implies that the driver will be unneeded and free to ignore the road.

The public also has begun to embrace this notion. Studies show that people want to engage in activities such as reading, watching movies, or napping in self-driving cars, and also that automation encourages these distractions. A study in France even indicated that riding while intoxicated was a perceived benefit.

Automation still requires people

Unfortunately, these expectations will be difficult to fulfill. Handing control of a process to a computer rarely eliminates the need for human involvement. The reliability of automated systems is imperfect. Tech innovators know from experience that automation will fail at least some of the time. Anticipating inevitable automation glitches, Google recently patented a system in which the computers in “stuck” self-driving cars will contact a remote assistance center for human help.

Yet the perception that self-driving cars will perform flawlessly has a strong foothold in the public consciousness already. One commentator recently predicted the end of automotive deaths. Another calculated the economic windfall of “free time” during the commute. Self-driving technologies will undoubtedly be engineered with high reliability in mind, but will it be high enough to cut the human out of the loop entirely?

A recent example was widely reported in the media as an indicator of the readiness of self-driving technology. A Delphi-engineered self-driving vehicle completed a cross-country trip. The technology drove 99% of the way without any problems. This sounds impressive — the human engineers watching at the wheel during the journey took emergency control of the vehicle in only a handful of instances, such as when a police car was present on the shoulder or a construction zone was painted with unusual line markings.

These scenarios are infrequent, but they’re not especially unusual for a long road trip. In large-scale deployment, however, a low individual automation failure rate multiplied by hundreds of millions of vehicles on US highways will result in a nontrivial number of problems. Further, today’s most advanced prototypes are supported by teams of engineers dedicated to keeping a single vehicle safely on the road. Individual high-tech pit crews won’t be possible for every self-driving car on the road of the future.

People need to be able to take control

How will flaws in automation technology be addressed? Despite Google’s remote assistance center patent, the best option remains intervention by the human driver. But engineering human interactions with self-driving cars will be a significant challenge.

We can draw insights from aviation, as many elements of piloting planes already have been taken over by computers. Automation works well for routine, repetitive tasks, especially when the consequences of automation mistakes are minor – think automatic sewing machines or dishwashers. The stakes are higher when automation failures can cause harm. People may rely too much on imperfect automation or become out-of-practice and unable to perform tasks the old-fashioned way when needed.

Several recent plane accidents have been attributed to failures in the ways pilots interact with automation, such as when pilots in correctable situations have responded inappropriately when automation fails. A term – automation surprises – has even been coined to describe when pilots lose track of what the automation is doing. This is a quintessential human factors problem, characterized not by flaws with either automation or pilots per se, but instead by failures in the design of the human-technology interaction.

When machines take over, the work required of the human is typically not removed — sometimes it is not even reduced — as compared to before the automation was implemented. Rather, the job becomes different. Instead of manual work, the human is relegated to the role of a monitor – one who constantly watches to detect and correct technology failures. The problem is that people are not especially well-suited for this tedious job. It’s not surprising that drivers retaking manual control from automation need up to 40 seconds to return to normal, baseline driving behaviors.

Tech + driver = cooperative effort

All of this is not to say that self-driving cars will fail to deliver benefits; they will undoubtedly transform the driving experience. But to develop this promising technology, human factors must be considered. For example, multimodal displays that use a combination of visual, auditory, and tactile (touch) information may be useful for keeping the driver informed about what the automation is doing. Adaptive automation – where the computer strategically gives some control of the car back to the driver at regular intervals – may be able to keep the human engaged and ready to respond when needed.

The technology-centric expectations currently being fostered overlook the substantial body of science on the human element of automation. If other examples of automation, including aviation, can provide any insight, focusing on technology to the exclusion of the human it serves may be counterproductive.

Instead, engineers, researchers, and the general public should see vehicle automation as a cooperative effort between humans and technology — one where the human plays a vital, active role in systems that optimize the interaction between the driver and the technology. A key element will likely require designing new, innovative ways to keep the driver in the loop and informed about the status of automated systems. In other words, “self-driving” cars will need people, too.

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It’s the most famous taxi in the world and a British icon, rivalling the Queen and red pillar boxes for global recognition. Now there’s a battle to make London’s black cabs greener. Geely, the Chinese automaker that owns the London Taxi Company, is investing £250m in a zero-emission capable version of the world-famous black cab to be built in Coventry.

British firm Metrocab based in nearby Tamworth has also developed an eco-friendly version of the London cab. Meanwhile Shenzen-based BYD has signed a deal to provide electric cars for London chauffeuring firm Thriev.

It’s no surprise these innovations are happening in London as the city has taken increasingly aggressive steps to combat poor air quality. Since 2008 London has hosted one of the largest low emission zones (LEZ) in the world and an ultra-low emission zone (ULEZ) has now been announced that will come into force in central London in 2020, with proposed regulations on new taxi purchases as early as 2018.

On the face of it, electric vehicles (EVs) are the perfect fit for taxis. Taxi firms differ from private consumers as the vehicles can be in almost continuous use, so running and operational costs are much more important than initial purchase price. Wherever electricity is significantly cheaper than petrol, cab companies are able to absorb the higher costs of EVs. Research by Coventry University on small car fleets supports the evidence from a growing number of EV taxi firms that higher levels of vehicle usage can quickly translate into savings.

Electric vehicles are also more reliable than their conventionally fuelled equivalents as EVs have fewer moving parts – which is a big advantage when temporarily losing a cab means an immediate loss of revenue. Low or zero tailpipe emissions may not always be a big draw for individual passengers, but they can be enough to win corporate and government clients keen to burnish their environmental credentials. Finally, larger firms can enter the electric vehicle market on a trial basis, supplementing their fleet without the risk of disruption that individual buyers might experience if going electric proves to be not to their liking.

Bumps in the road

Yet technical challenges remain. Taxis aren’t public transport. They don’t follow set routes, might not own their own specialist infrastructure and are less likely to have set idling times. As such, limited range, charging time and availability are all more significant impediments for cab firms.

The new model proposed by the London Taxi Company would overcome this challenge by operating a hybrid engine capable of running on electricity in the ultra-low emissions zone and petrol outside it. Metrocab’s solution is to use a petrol range extender to boost battery life. At the same time, firms such as Thriev have sought to roll out their own charging infrastructure to reduce charge times down to half an hour.

Yet clearly doubts linger – and it is telling that while Nissan decided to suspend its petrol-based version of the black cab (also assembled in the West Midlands) in light of the ULEZ announcement, they have not announced plans to introduce an electric version. As David Bailey at Aston Business School observes, the current market leader in electric vehicles appears to be adopting a wait-and-see approach, to see how the market develops. After all there is still quite a bit of scope for change – and by 2018 a range of hydrogen fuel cell vehicles will provide a faster fuelling, if more expensive, alternative.

Today London, tomorrow the world?

These concerns are real, but so are the opportunities for manufacturers. London’s ultra-low emissions zone announcement represents the next step in a trend towards city-level polluter-pays policies. Europe already has well over 100 low emission zones. Paris, for instance, already operates a very visible electric vehicle sharing scheme and a ban of diesel vehicles has been mooted for 2020. In Beijing, new emission limits are being considered, while an entire zero-emission city is being built in Dongtan, an island near Shanghai.

Global warming may be low on the priority list for national governments, but for city authorities the impact of emission on air quality is often an immediate and pressing concern. Manufacturers that are able to make a success of the London ULEZ may find a queue of emerging-market megacities considering similar regulations.

In this context, it is no coincidence that two Chinese car-makers are leading the race. Electric taxis are more common in Chinese cities, in large part due to the high costs of liquefied natural gas as an alternative fuel. Chinese automakers have also struggled to establish their brands in Europe and America, but in the taxi market they are more able to compete on specifications.

Geely’s investment in LTC could be a masterstroke. In one leap, Geely acquires a globally recognised design icon, a relatively protected launch market in the form of the London black cab trade and access to significant research and development resources in the West Midlands. Geely already produces a version of the London cab in Shanghai and has a stated interest in pushing exports for the updated electric model.

All of which is good news for the UK. The ultra-low emissions zone both improves health in the capital and injects life into the emerging electric taxi sector where the country has historic design advantages. This demonstrates the strength of coupling forward-looking environmental policies with regional R&D investments in niche sectors. Whether or not this outcome is design or a happy coincidence will surely not trouble the prime minister as he touts the deal on the campaign trail.

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By Ola Henfridsson, University of Warwick

The news that Google is to get into the ride-hailing scene – the same taxis-that-aren’t-taxis business pioneered by Uber – may have come as a surprise to some. We can speculate that it may even have come as a surprise to some at Uber that Google is to become a competitor, considering Google’s chief legal officer David Drummond sits on Uber’s board, and Google has invested hundreds of millions in the start up.

What’s interesting is how determined Google is to take its research in autonomous, driverless cars and put it to use in the taxi business, in doing so possibly driving an autonomous cart through the traditional transportation services market.

It’s well known that innovation is about combining existing technologies into products and services that offer new value for customers. Often this innovation arrives incrementally, refining existing concepts to better satisfy a known market. The combination of autonomous cars and Google’s extensive cloud services in the context of the taxi business promises to be much more radical.

Admittedly it will be a bumpy road, with numerous regulatory and political hurdles to cross. Uber has already come across such issues as it has expanded to some 250 cities across the world. However, as both the technology and the market is there, it’s not so hard to imagine that this could produce fairly radical innovation. It’s mainly the question of when that’s difficult to predict.

So the technology is there: as economists Eric Brynjolfsson and Andrew McAfee pointed out in their recent book The Second Machine Age, computers are increasingly capable of doing things that in only the fairly recent past were either laborious or impossible.

Pattern recognition and complex communication are areas where the unthinkable is increasingly becoming thinkable. Using sensor and communication technologies combined with information processing power, Google has led the way in showing how self-driving vehicles are more than science fiction. The fact that all major automakers are making significant investments to keep pace show that this is for real.

And the market is there too: once we stop thinking about autonomous driving as an add-on feature that will incrementally improve cars, a huge market opens up. So far manufacturers treat autonomous driving tech such as parking assist, pedestrian detection, auto-braking systems, and vehicle-to-vehicle communication as premium features for those willing to pay.

But seen through Google’s eyes, their impact could be much more dramatic: Google CEO Larry Page has suggested the firm’s investment in self-driving technology is about reshaping the city to be safer, cleaner, and more efficient. For this to come to fruition will involve many organisations and groups, and would be likely to reshape the auto market too. The willingness with which customers have adopted Uber is an indication what may lie down the road.

As always, we cannot tell exactly how it will play out. But history tells us that when sufficient technology and a ready market go hand-in-hand, established structures and companies will have a fight on their hands.

Consider, for example, the painful struggle of the music industry as digitisation and broadband internet transformed its prospects, putting new players in charge. While recourse to regulation and law put a brake on change for a while, even though some pioneers such as Napster fell by the wayside, many more rose to take its place.

Perhaps this is what Google has in mind: betting on transforming transportation itself, rather than changing how aspects of the business are conducted. Creating a successful autonomous taxi service would stimulate investments into all manner of new areas of transportation, promising huge productivity gains. Leading that development is a role that would see Google stepping well beyond its origins in search engine advertising.

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