I hope his long game is launching solar arrays into space and beaming the power back to earth, effectively combining Tesla Motors, SolarCity, and SpaceX
Musk is actually very critical of solar power in space. He says it's very inefficient due to the lack of atmosphere to "pre-filter" the energy[1]. He believes nuclear power is the way to go in space.
Neither "nuclear" nor "filter" appear in the text of that interview.
Here's the paragraph:
One thing we learned today: While Musk loves electric cars and spaceflight, there's one thing he hates: space solar power. "You'd have to convert photon to electron to photon back to electron. What's the conversion rate?" he says, getting riled up for the first time during his talk. "Stab that bloody thing in the heart!"
He's talking about space based solar power for terrestrial consumption. Solar cells actually generate more electricity without the atmosphere filtering the solar spectrum. But in LEO they can't stay aligned with a ground receiver. Beyond LEO they face enough charged particle radiation damage that standard silicon cells degrade too quickly, so you have to use more expensive cells. And all solar power satellite schemes rely on converting solar electricity to microwave energy in space and converting back to electricity on the ground; that's the lossy "photon to electron to photon back to electron" conversion that he (rightfully, IMO) gets riled up about.
As I see it, the solar power satellite concept could only sound plausible in the 1970s. That was back when both silicon and gallium arsenide solar cells were exotic and before the Space Shuttle had actually flown, so people could still use its ridiculously optimistic on-paper attributes to plan SPS construction. When it turned out that the Shuttle was not going to fly anywhere close to 50 times per year, and the costs per flight went up commensurately, that was a major setback. The falling cost of terrestrial PV modules based on crystalline silicon undermined another rationale for SPS. It made a lot more sense to think about exotic, expensive installation locations when the solar hardware itself was expensive regardless of location. The third setback, the falling cost of battery storage, is currently underway. A geosynchronous solar power satellite can deliver power even when it's night on Earth, but the relative value of that too is falling.
We have a few orders of magnitude more energy from sunlight hitting the earth than our global requirements. Why go through the effort of hauling all that into space when we can meet all our needs on the ground?
[1] http://www.popularmechanics.com/technology/a8101/elon-musk-o...