Solar City and Tesla have big plans for solar power generation, including huge factories that would slash the cost of solar power in half.

Photo Credit: © Alfi -

Photo Credit: © Alfi -

Solar City has announced that the company will manufacture solar panels that are installed with battery packs to deal with the intermittency of solar power. CEO Lyndon Rive and chairman Elon Musk made the announcement at a New York event last month, saying the products should arrive within five to 10 years. Musk added that his company Tesla Motors will supply some of the batteries.

Rive and Musk, who are related, added that solar power would become cheaper in the U.S. than power produced from natural gas within the same time frame. To keep up with that, they will be building two major manufacturing operations that will work symbiotically with each other.

Tesla Motors also announced plans last month for a factory in Nevada that would produce lithium-ion batteries. This factor will supply batteries for the company's electric vehicles and for Solar City.

Solar City currently has just one small factory, but it is in talks with New York State and potential partners to fund a plant as big as the largest one found in Asia (where the majority of lithium-ion batteries are made). Rive then hopes to follow this factory with ones that are 10 times as large. At that scale, he estimates the cost for installed solar panels will go from $2.30 per watt to $1.20.

Tesla's battery factory plans has the potential to eclipse all lithium-ion battery production in the world, if it reaches full capacity. Musk estimates that his factory could lower the cost of the batteries to less than $100 per kilowatt, compared to $300, what analysts estimate current costs to be.

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