When Elon Musk ventured into the 200-year-old battery business and announced his $5 billion battery plant, Gigafactory, many watched with raised eyebrows. Something similar happened this past June when he proposed purchasing the solar energy company SolarCity for $2.3 billion, and then again in July when he revealed phase two of his “Master Plan.” His company has defined electric cars, and is making large-scale power storage possible.
If the Tesla and SolarCity merger goes through on Thursday, it will be another step forward in Musk’s master plan in creating a solar-powered car. Even more than that, it is a signal that 2017 will be the year we finally reach an inflection point with the introduction of next-generation batteries. The profound impact this next generation of batteries has for the future of energy is something I am optimistic about.
Until recently, advances in grid-scale batteries had been few and far between. However, if my assumption is true and we are at an inflection point in the innovation of batteries, it will result in big breakthroughs that will permanently change how the world stores energy.
For years, the batteries that power our phones, laptops and solar-power storage have been made overseas. And, unbeknownst to most, four large conglomerates control the world’s lithium mines that power those batteries. The world has been beholden to these mining companies, and it has been estimated that by 2020, battery prices and consumption will nearly double. This will create a critical need for new solutions and manufacturing sources.
Fortunately, the next generation of grid-scale batteries will be more affordable, scalable and safer than their predecessors. They will be large enough to support homes, factories, towns and even mini-grids. It will mean power for people in real need of it — for workers who have no light to function with at night, for students with no internet to mine for information, for farmers without the energy to wash or irrigate crops. Currently, these regions that are off the grid rely on intermittent sources like wind and solar power, which require energy-storage solutions in order to deliver consistent, efficient power. The pairing of next generation grid-scale batteries with existing renewable-generation sources will be utterly transformative for people in regions without current reliable power sources.
The applications for energy storage aren’t limited to cars and the developing world. Next-generation battery technology will be effective for taking on natural and man-made disasters where grid-scale storage can help with rescue and recovery efforts. And with the growing threat of cyber warfare to infrastructure, which includes electric grids, these next-gen batteries could prove to be vital in the event of a widespread outage due to a hack.
As a global investor, I have studied the flow of money to fund new-age battery technology and have seen firsthand a dramatic increase in investments over the past couple of years. We have all been witness to the hype cycle surrounding the industry, and I will not be surprised if there continues to be skepticism directed toward the industry.
If the outcome from Thursday’s Tesla and SolarCity vote is in favor of a merger, it is another big bet on Elon Musk’s grand vision and on the future of global energy. And whether or not the merger goes through as planned, we will learn even more about his vision for the next generation of batteries and energy storage
Philippe Bourguignon is vice chairman of Revolution Places, an investment portfolio that invests in real estate and hospitality — at Revolution, Steve Case’s VC firm. Prior to Revolution, Bourguignon was the co-CEO of the World Economic Forum, chairman and CEO of Euro Disney, and EVP of Disney Europe. Reach him at LinkedIn.
This article originally appeared on Recode.net.