If electric-car maker Tesla Motors (NASDAQ:TSLA) has its way, there will be a day when it is just as much of an energy company as it is an automaker. Its 2014 introduction of energy storage products for residential and commercial customers and its construction of the world's largest battery factory highlight its bet on an energy-storage dependent electric future. To this end, the company has dropped Motors from about every reference to the company except its official publicly traded name, now going by "Tesla" instead.
Today, Tesla is taking a key step in becoming an energy company, announcing its most significant energy storage project yet.
Tesla's 80 MWh Powerpack system
Tesla was selected last week to provide a 20 megawatt/80 megawatt-hour Powerpack system for public utility Southern California Edison. The utility-scale storage solution will be deployed at the Southern California Edison Mira Loma substation.
The project is a response to a catastrophic rupture in the Aliso Canyon natural gas reservoir last October. The rupture caused a methane gas spill, displacing over 8,000 local residents and releasing 1.6 million pounds of methane into the atmosphere -- the worse methane leak in U.S. history. The leak ultimately led California Gov. Jerry Brown to issue a state of emergency in May and mandate rapid deployment of energy storage.
"Southern California Edison, among other utilities, was directed to solicit a utility-scale storage solution that could be operational by December 31, 2016," Tesla said in a blog post on Thursday. "Unlike traditional electric generators, batteries can be deployed quickly at scale and do not require any water or gas pipelines."
Tesla explained the system's purpose:
The system will charge using electricity from the grid during off-peak hours and then deliver electricity during peak hours to help maintain the reliable operation of Southern California Edison's electrical infrastructure which feeds more than 15 million residents.
Upon completion in three months, this 80 MWh energy storage project will be the largest operating lithium ion battery storage project on earth, Tesla said to The Motley Fool.
Highlighting the Gigafactory's flexibility
The scale of this project highlights the flexibility of Tesla's Gigafactory. Still under construction, the company is building the unprecedented battery factory with a unique just-in-time construction process, allowing for simultaneous production and construction. The factory is being built in phases so Tesla can begin manufacturing in the finished portions, allowing it to make use of the factory while it's still being built.
This project is the first to demonstrate how the factory can fulfill a significant order even as construction continues. And this 80 MWh order is particularly interesting because the company is manufacturing, shipping, installing, and commissioning the energy storage system in just three months in order to help California address its urgent situation quickly.
For some context on how large this project is for Tesla, this single project is more than three times Tesla's record 25 MWh of first-quarter energy storage deliveries, which spanned four different continents and was made up of 2,500 Powerwalls and nearly 100 Powerpacks.
Tesla is planning for its Gigafactory to be ready for 35 gigawatt-hours of cell production per year by 2018, supporting both production of 500,000 vehicles per year and fast-growing energy storage demand. While this project only demonstrates a fraction of this capability, it's a good sign Tesla is continuing to make progress on Gigafactory construction and production.