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Boston energy firm to partner with new Tesla battery system

A guest takes a photograph of the Powerpack battery system after Tesla CEO Elon Musk unveiled a suite of batteries for homes, businesses, and utilities on Thursday.Kevork Djansezian/Getty Images
Software from Tim Healy’s EnerNOC will be used in commercial applications of Tesla’s new battery pack.Josh Reynolds/Globe Photo/File 2012

With its stock languishing for the past year, EnerNOC Inc. could benefit from a powerful ally as it pushes big energy consumers to fundamentally change how they use electricity.

On Thursday night, that friend announced himself with great fanfare: Elon Musk, the bold billionaire who is trying to perfect the electric car, cover American homes in solar panels, and perhaps one day colonize Mars.

Boston-based EnerNOC will be part of Musk’s newest ambition: to equip residences and businesses with battery systems to reduce their dependence on the traditional electric-power grid. Musk’s company, Tesla Motors Inc., will provide the arrays of batteries, called Powerpacks, while EnerNOC will provide software to enable large consumers, such as supermarket chains or factories, to manage their electricity consumption effectively.


Chief executive Tim Healy said EnerNOC’s relationship with Tesla could bring tens of millions of dollars in revenue over time, although he declined to go into detail on the business arrangement.

“I think there’s a key thread of commonality between Elon Musk and a number of us here at EnerNOC. They’re in the business to try to change how the world uses energy,” Healy said. “In order to make big changes occur, you have to have big bold ideas, and we like that.”

Elon Musk’s star power — he is a cofounder of PayPal, chairman of SolarCity, and chief executive of rocket-maker SpaceX — quickly cast its glow on EnerNOC. At one point Friday, EnerNOC’s share price was up 33 percent before closing at $12.86, 16 percent above the previous day.

“There are a lot of big expectations around [Tesla],” said John Quealy, an equity analyst at investment bank Canacord Genuity. “The hype factor spilled over into EnerNOC.”

A business partner with a strong reputation could prove crucial to EnerNOC as it shifts its focus to sophisticated software that helps large energy consumers keep costs in check. Tesla happens to be that rare energy company with a household name.


The Tesla-EnerNOC partnership will begin slowly, through pilot programs in California with retailers, manufacturers, and other big consumers of electricity. The commercial-size batteries are sold in 100-kilowatt-per-hour modules, cost $25,000 apiece, and can provide two to four hours of continuous power.

One of the first Tesla customers EnerNOC will help is Stater Bros. Markets, a Southern California supermarket chain.

“It’s a very tight-margin business, in the grocery retail area,” Healy said. “When they can cut 10 to 20 percent of their energy spending, that will flow right to their bottom line.”

Amazon said it is running a test of Tesla’s battery packs to provide 4.8 megawatt-hours of electricity for its Web and data center operations in Northern California.

Musk envisions a time when Tesla batteries can help residents and businesses use their own energy sources — windmills and solar panels, for example — to disconnect completely from the power grid. Tesla is building a massive Gigafactory in Nevada that will be powered by solar panels and wind turbines to make batteries for the company’s widely praised electric cars.

It’s now clear the Gigafactory will also make batteries for buildings, too. And with this partnership, EnerNOC will be right there for the ride.

“Some customers want to go off the grid,” said Richard Baxter, a Boston energy-storage consultant. “To do that, you need an on-site power source, like solar. You need some power electronics. You also need a bunch of software to be able to manage that system. That’s one opportunity that EnerNOC could take advantage of.”


Tesla’s partnership with EnerNOC didn’t come as a complete surprise. In March, Tesla set up a booth at a business conference that EnerNOC hosted for customers and analysts in Philadelphia. Industry experts view the two companies as kindred spirits in the coming revolution that’s expected to disrupt the fossilized electricity-distribution system.

“Tesla, EnerNOC, and dozens of other companies are sitting on a precipice of a once-in-a-generation opportunity,” Healy said. “We’re on the cusp of some pretty dramatic transformations.”

Tesla’s aggressive energy-storage plans were welcomed at Ambri Inc., a startup based in Cambridge that is developing a liquid-metal alternative to the more popular lithium-ion technology that Tesla plans to use for batteries.

“It isn’t one supplier versus another,” said Phil Giudice, Ambri’s chief executive. “We’re much more concerned about upending the ‘business as usual,’ the status quo.”

Green Mountain Power, the utility that provides electricity to most of Vermont, was already fielding dozens of calls on Friday about Tesla’s new venture. That’s because the Colchester company was the first utility to agree to offer Tesla’s home-scale batteries to consumers.

Each 7-kilowatt-hour battery, known as the “Powerwall,” will sell for $3,000, and could provide electricity for a home’s essential appliances for at least four hours if there’s a power outage. These 220-pound batteries will start to hit the market in October.


“It’s really exciting to partner with Tesla because people know who they are, and they’re really innovative,” said Kristin Carlson, a spokeswoman for Green Mountain Power. “You mention their name, and people’s eyes light up.”

Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.