Tesla Wins Largest Lithium Ion Battery Storage in the World (TSLA, AES)
By Rakesh Sharma
Electric car maker Tesla Motors Inc. (TSLA) today announced that it had won a deal from Southern California Edison to provide electric battery storage of 20 megawatts to supplement the utility’s peak grid times. Tesla said the system, which will be implemented using the company’s Powerpack batteries, will be the largest such project in the world, upon completion. The batteries will charge electricity from the grid during off-peak hours and use it to supply electricity during peak hours. Tesla said the batteries will provide enough power for 2,500 homes or 1,000 Tesla cars.
The impetus for the current deal was a rupture in the Aliso Canyon natural gas reservoir last October that displaced 8,000 residents from the area and resulted in the United States’ largest methane gas leak into the atmosphere. In response, Governor Jerry Brown mandated rapid deployment of energy storage. Southern California Edison was directed to “solicit a utility-scale storage solution” by December 31, 2016.
The market for similar battery storage projects will increase in the future. In 2013, the California Public Utilities Commission passed an order that requires the state’s three biggest utilities to procure 1.3 gigawatts of battery energy storage by 2020 in order to maintain grid reliability. Southern California Edison Co. and San Diego Gas & Electric requested the agency to approve contracts for more than 50 megawatts of lithium ion battery storage projects in August this year.
Tesla, which announced its battery storage solutions last spring, has said that its storage unit is already profitable with sales concentrated mainly in Australia and Germany. Its CEO Elon Musk has said that the market for battery storage is “staggeringly gigantic.” (For more, see also: The Economics of Tesla Batteries.)
Tesla’s competition in the market ranges from startups, such as Coda Energy, to established entities, such as AES Corporation (AES). In fact, the latter’s energy storage division announced a partnership with Mitsubishi Corp. earlier this year to sell energy storage across Asia and Australia.
News of Tesla’s win comes a day after the company came under fire from noted investor Jim Chanos for reporting widening losses and for its merger with solar panel manufacturer SolarCity Corp. (SCTY). (For more, see: Short Seller Chanos Warns Tesla Could Go Bankrupt.)
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