If Tesla (NASDAQ:TSLA) stock is in your portfolio, you had better be a believer in solar power. If the grid is dirty, electric cars are only a small step, and not a giant leap, toward a greener future. And Tesla's energy storage business, too, would have limited potential. Fortunately, however, it only takes a few minutes of examining some facts about solar power and the trends propelling the technology forward to realize it is an inevitable part of the future.

Image source: Tesla Motors.

Tesla CEO Elon Musk understands that solar technology will be one of the major drivers for electric cars. In addition to his chief executive position at Tesla, he happens to be the chairman of SolarCity (NASDAQ:SCTY.DL).

So, why does Musk believe in solar? On Twitter he gave his followers a straight answer. Linking to a blog post by engineering company ABB Group's Zachary Shahan, Musk said, "This is why I think solar power will be the primary long term solution."

Combining some of Shahan's curated points with some other developments, consider the potential in solar power.

1. Solar energy dwarfs any other source
The above statement can't be emphasized enough. The disparity between the potential energy from sun and other sources is simply astounding.

Consider Shahan's explanation.

The annual energy potential from solar energy is 23,000 TWy [Terra Watt years]. Energy potential from total recoverable reserves of coal is 900 TWy. For petroleum, it's 240 TWy; and for natural gas, it's 215 TWy. Wind energy's yearly energy potential is 25–70 TWy.

2. Prices for solar photovoltaics, or PV, panels are plummeting
Between 1997 and 2012, the price of PV panels has "dropped about 100 times over," Shahan says. And the decline more recently is still steep. Since 2008, the price of solar PV panels has declined about 80%.

Image source: SolarCity.

When solar PV panels will really become competitive, Musk has said, is when the unsubsidized cost of solar power is less than the cost of grid electricity from coal or fracked gas. This is the goal Musk says he had in mind when SolarCity announced this week that it had acquired PV panel maker Silevo. SolarCity said in the press release announcing the deal that it plans to utilize the acquisition to help it build the world's largest advanced solar panel factory in upstate New York, which will help it achieve "massive economies of scale to achieve a breakthrough in the cost of solar power."

3. Paired with batteries, the technology is convenient
Consider this excerpt from SolarCity's Silevo acquisition announcement.

The sun, that highly convenient and free fusion reactor in the sky, radiates more energy to the Earth in a few hours than the entire human population consumes from all sources in a year. This means that solar panels, paired with batteries to enable power at night, can produce several orders of magnitude more electricity than is consumed by the entirety of human civilization.

Of course Musk's Tesla is also at the center of the battery storage business.

Tesla chief technology officer JB Straubel emphasized the opportunity in battery energy storage as a keynote speaker at the annual energy storage symposium in May held by the Joint Venture Silicon Valley.

"I really love batteries. I might love batteries more than cars," he said.

But his love for batteries goes far beyond the way they effortlessly thrust a Model S performance model to 60 miles per hour in just 4.2 seconds. His love for batteries extends into the energy business.

Model S battery, built into the floor of the vehicle. Image source: Tesla Motors.

"We are an energy innovation company as much as a car company," Straubel said. In fact, he believes that stationary energy storage will scale faster than automotive energy storage.

The stationary battery storage will also be helped by continued improvements in batteries.

GreenTechGrid's Eric Wesoff recounted Straubel's bullish outlook on the current rate of battery innovation:

He noted that in the five years between the launch of the Roadster and the Model S, battery performance had improved by 40 percent. He said that battery energy density has doubled over the last ten years and that the curve is not starting to plateau.

The source of battery improvements in the next five to 10 years? It will come from better anode and cathode material, he says.

Considering these developments in solar power and batteries, combined with the squanderable abundance of energy that radiates from the sun to the earth, it's possible that Elon Musk's SolarCity and Tesla are positioned at the center of two of the biggest revolutions we'll see in the next several decades.