Elon Musk, CEO of Tesla Motors, announced that the company has completed the design for a new kind of battery that will be used to power homes.

Based on Tesla’s lithium-ion battery technology, the new battery is expected to help the company become a leader in the growing home energy storage market.

During a conference call with investors last Wednesday, Musk suggested that the design of the battery is complete and production could begin in about 6 months. “The long-term demand for stationary energy storage is extraordinary”, stated JB Straubel, Tesla’s chief technical officer, during that call. “We’ve done a huge amount of effort there and have talked to major utilities and energy service companies”, Straubel added.

Home energy storage is a potentially enormous market, and as the electric car industry drives battery technology forward, prices are dropping and performance is increasing. Nissan hails its LEAF battery as being a good backup power source for homes. The battery in the Toyota Mirai fuel cell vehicle can reportedly be removed from the car and brought inside to power a typical home for up to a week.

In Hamburg, Germany, Volkswagen (VW) will donate 100 batteries from its eGolf cars to create a battery storage facility for the local utility company. A battery that is no longer considered serviceable for automotive use maintains up to 70% of its energy storage capacity.

The VW initiative will allow the utility to store excess power during off peak times and draw on that stored energy during periods of peak demand. This is often referred to as Peak Load Shaving.

In a conference call last year, Musk made reference to his plans for home power storage. “We are trying to figure out what would be a cool stationary [battery] pack,” Musk said. “Some will be like the Model S pack: something flat, 5 inches off the wall, wall-mounted, with a beautiful cover, an integrated bi-directional inverter, and plug and play.”

However, the two conference calls still leave some confusion over whether Musk’s “we” refers to Tesla Motors or another of Musk’s ventures SolarCity, run by his cousin Lyndon Rive. The solar power firm is already offering residential energy storage units to limited customers. While Tesla Motors’ Fremont facility is also working on larger stationary storage systems for businesses and utility clients. The automaker has already deployed a massive storage unit at its Tejon Ranch Supercharger station at Interstate 5 in Southern California and has various other commercial installations in the field, according to a Bloomberg report.

Regardless of which “we” Musk was eluding to, this development is likely to be impactful. Just last year, investment firm, Morgan Stanley claimed Tesla’s energy storage products could be “disruptive” in the United States and Europe as customers are willing to reduce their utility fees by going “off grid”.

When considering that many experts predict the market for behind-the-meter solar photovoltaics (PV) paired with energy storage will surpass $1 billion by 2018 in the US alone, it’s likely that this has been part of the plan for Musk’s Gigafactory all along.

At an event in New York in Q3 2014, announcing plans for SolarCity to build a gigantic PV-panel factory, Musk and Rive mentioned that every SolarCity unit would come with battery storage within five to 10 years, and that the systems would supply power at a lower cost than natural gas.

No doubt that those batteries will come from the Gigafactory, currently being built in Nevada. Once the factory begins production, the growing demand for energy storage and the economies of scale from such a facility, will allow it to immediately ramp up production. Tesla CTO JB Straubel has been reported as saying that the market for stationary batteries "can scale faster than automotive" and that a full 30% of the Gigafactory will be dedicated to them.

The prospect of cheap solar panels combined with powerful batteries will be of greatest concern to the utility sector. In fact, it has been a source of concern for utilities for some time. In 2013, the Edison Electric Institute, the trade group for investor-owned electric companies, issued a report warning that disruption was coming.

"One can imagine a day when battery storage technology or micro turbines could allow customers to be electric grid independent," the report said, likening the speed of the coming transition to that of landlines to mobile / cell phones 15 years ago. Suddenly regulated monopolies will find themselves in competition with their own customers.

Encouraging the deployment of home based generation and storage will see the role of utilities change or their power diminish. However, obstructing the process could see more and more customers go “off grid”, completely independent of those utilities. Disruption Indeed!