All it takes is one tweet from Tesla CEO Elon Musk to whip journalists and financial analysts into a frenzy of speculation. Last month, Musk hinted at a "major new Tesla product line" that had nothing to do with electric cars, to be unveiled this week.

It didn't take long to solve the mystery. On an earlier call with investors, Musk prematurely released key details: “We are going to unveil the Tesla home battery, the consumer battery that would be for use in people’s houses or businesses fairly soon." 

That product is already out in the market. As GTM's Eric Wesoff pointed out, Tesla has been experimenting with residential and commercial storage systems for years. The company has nearly 100 storage projects in the queue in California, and is eyeing other behind-the-meter battery markets to soak up production from its Giga factory

In a recent interview on the Energy Gang podcast, Tesla's Mateo Jaramillo said that one-quarter of lithium-ion batteries produced at the company's factory could be used for stationary applications. "Everywhere we look, there's an opportunity for storage,” he said.

Listen to the entire interview for context on the coming battery announcement:

So what does Tesla see in the behind-the-meter storage market in the U.S., which has been dominated by utility-scale installations? Driven by rising electric rates, high demand charges in the commercial sector, a desire for continuous power among early commercial and residential adopters, and a natural synergy with solar, on-site batteries are set to grow steadily in the U.S.

According to GTM Research, the behind-the-meter battery sector will make up 45 percent of the storage market before the end of the decade. Although the market will be modest, at around 385 megawatts, it will still represent a roughly $750 million business opportunity by 2019. 

Source: GTM Research's Energy Storage Monitor

By the middle of the century, the U.S. market alone will be worth tens of billions of dollars. Assuming electric rates continue to rise at 3 percent a year, batteries paired with solar PV systems could consistently beat the price of grid electricity throughout the country within a decade and a half.

The below chart comes from a recent economic analysis conducted by the Rocky Mountain Institute, CohnReznick and Homer Energy. Even assuming modest cost reductions in batteries and PV, the report showed a clear competitive edge for solar-plus-storage in both commercial and residential by 2030. 

Tesla and SolarCity have already deployed 300 residential storage systems paired with PV. Although the companies have not released data on the performance and economics of the pilot systems, they do plan to deploy hundreds more later this year.

Source: RMI's "The Economics of Load Defection"

The improving competitiveness of on-site batteries offers a clear (but currently still small) path for Tesla and the many other companies deploying projects. The path is much less clear for utilities.

According to the RMI analysis, by 2030, batteries paired with solar could cut electricity sales cut by half in both the residential and commercial sectors for Northeast utilities. That could mean nearly $40 billion in lost revenues -- money that could shift into the coffers of battery service providers like Tesla.

"Our analysis shows that grid-connected solar-plus-battery systems become economic for large numbers of customers, and those systems have the potential to supply greater and greater portions of customers’ electricity. Assuming customer adoption follows optimal economics, the magnitude of potential kWh defection from the grid is large," wrote the authors.

Source: RMI's "The Economics of Load Defection"

Tesla is far from the only company that sees the potential in behind-the-meter storage. A range of startups, including Coda Energy, Green Charge Networks, Stem and Sunverge have cumulatively deployed hundreds of batteries for commercial customers -- raising millions of dollars in equity and for project funds in the process. These companies are all building relationships with solar installers in an effort to improve the economics of their projects, and potentially reach new customers with full-service solutions that include batteries, PV and control software.

The market is currently much smaller than the hype around batteries. But the trajectory is upward. Although we're still awaiting official details on Tesla's battery announcement, the "major new product line" touted by Musk will very likely align with the activity in the behind-the-meter sector.