Tesla Is Plugging a Secret
Mega-Battery Into the Texas Grid
By and
March 8, 2021, 11:00 AM GMT Updated on March 8, 2021, 3:14
PM GMT
Elon Musk is getting into the Texas power market, with
previously unrevealed construction of a gigantic battery connected to an ailing
electric grid that nearly collapsed last month. The move marks Tesla Inc.’s
first major foray into the epicenter of the U.S. energy economy.
A Tesla subsidiary registered as Gambit Energy Storage LLC
is quietly building a more than 100 megawatt energy storage project in
Angleton, Texas, a town roughly 40 miles south of Houston. A battery that size
could power about 20,000 homes on a hot summer day. Workers at the site kept
equipment under cover and discouraged onlookers, but a Tesla logo could be seen
on a worker’s hard hat and public documents helped confirm the company’s role.
Property records on file with Brazoria County show Gambit
shares the same address as a Tesla facility near the company’s auto plant in
Fremont, California. A filing with the U.S. Securities and Exchange Commission
lists Gambit as a Tesla subsidiary. Executives from Tesla did not respond to
multiple requests for comment.
As winter storms pummeled Texas in February and left
millions without power for days, Musk took to Twitter to mock the Electric
Reliability Council of Texas, or Ercot, the nonprofit group that manages the
flow of electric power to more than 26 million customers. “Not earning that R,”
he wrote. Musk, 49, recently moved to Texas and his various companies are
expanding operations in the state.
The battery-storage system being built by Tesla’s Gambit
subsidiary is registered with Ercot. Warren Lasher, senior director of system
planning at Ercot, said the project has a proposed commercial operation date of
June 1. The site is adjacent to a Texas-New Mexico Power substation.
While Tesla is known for its sleek, battery-powered electric
vehicles, it’s always been more than a car company: its official mission is to
“accelerate the world’s transition to sustainable energy.” Utility-scale
batteries are needed to store the electricity produced by wind and solar, but
they can also become lucrative opportunities. By storing excess electricity
when prices and demand are low, battery owners can sell it back to the grid
when prices are high.
Tesla has spent years expanding into residential energy
technology. Back in March 2015, Musk unveiled a home battery product, dubbed
the Powerwall, with a splashy event at its design studio near Los Angeles.
Scores of utility and energy executives attended. A year later Tesla acquired
SolarCity, the solar-panel installer founded by Musk and his cousins. Musk then
hawked a “solar roof” that has gone through several iterations without becoming
a strong contender in the market.
But the company’s product lineup already reaches beyond the
home and into the electrical grid. The Tesla Powerpack and even larger Megapack
were designed with utility customers in mind. Tesla’s battery project in South
Australia, launched in 2017, is adjacent to a wind farm and can store surplus
electricity generated on gusty nights for daytime demand. At 100 megawatts, it
was the largest battery project in the world at its launch.
While Tesla’s focus on energy often takes a back seat to the
increasingly competitive business of manufacturing and selling electric cars,
Musk and his executive team continue to highlight energy as a key part of their
growth. “I think long-term Tesla Energy will be roughly the same size as Tesla
Automotive,” Musk said during an earnings call in July 2020. “The energy
business is collectively bigger than the automotive business.”
Tesla’s battery packs are connected to Southern California
Edison’s Mira Loma substation, located east of Los Angeles. The 20 megawatt
system, which has been online since December 2016, supports grid operation
during peak hours and helps the utility make the most of its renewable
resources. In the San Francisco Bay Area, PG&E Corp. and Tesla are constructing
a 182.5 megawatt system at an electric substation in Moss Landing that should
be operational by August.
Tesla Energy could
represent up to 30% of the company’s total revenue by the 2030s, up from
roughly 6% today, according to analyst Alexander Potter of Piper Sandler. His
research has highlighted the potential for Autobidder,
a software platform Tesla designed for utilities. Tesla Chief Financial
Officer Zachary Kirkhorn has described Autobidder as an “autonomous energy
market participation system that does high-frequency trading.” Potter has a
$1,200 price target on Tesla stock, the highest on Wall Street.
“Tesla’s energy storage business on a percentage basis is
growing faster than their car business, and it’s only going to accelerate,”
said Daniel Finn-Foley, head of energy storage at Wood MacKenzie Power and
Renewables. “They are absolutely
respected as a player, and they are competing aggressively on price.”
Musk’s empire has numerous branches in Texas, and with the
billionaire’s recent relocation from California, the Lone Star state now
appears set to become the center of his universe. Space Exploration
Technologies Corp., or SpaceX, is building and testing Starship, a new rocket
and spacecraft designed to take humans to Mars, at a facility in Boca Chica on
the southern tip of the Gulf Coast. Another rocket-testing facility is located
in McGregor, near Waco. Musk posted a family photo to Twitter on Monday, with
the caption “Starbase, Texas.”
SpaceX has posted engineering positions in Austin for a
“new, state of the art manufacturing facility” for Starlink, a space-based high
speed Internet service. Tesla is also building a new factory in East Austin for
its forthcoming Cybertruck, an electric pickup. Gigafactory Texas, as the facility is known, will create 5,000
mid-level manufacturing jobs and is supposed to produce the first vehicles
by the end of this year.
Musk’s focus on Texas comes as the dominant U.S. energy
hub—with its abundant natural gas, oil, solar and wind resources—is being
transformed by the surging growth of renewables. For more than a century the
Texas grid has transported power from large plants to customers over miles of
transmission lines. The recent storms have highlighted just how fragile that
legacy system is in the era of climate change. With the build out of giant
batteries like those made by Tesla’s Gambit project and others, the state’s
power grid could be remade around distributed
generation that may prove more resilient.
About 2,100 megawatts
of battery storage and 37,000 megawatts of solar and wind are in advanced
stages of connecting to Ercot’s grid. “It’s not only stunning but the financing
is already in place,” Jigar Shah said on March 2, a day before the
clean-energy pioneer was named as director of the U.S. Energy Department’s loan
finance office.
The Gambit project was originally developed by San
Francisco-based Plus Power, a privately held renewables company that has
battery operations in several states. Scott Albert, the former city manager of
Angleton, said it was obvious that Plus Power was working with Tesla. A project
summary available on the city’s website features images of Tesla’s
utility-scale battery products, and some of Plus Power’s principal staffers
previously worked at Tesla. (Plus Power confirmed its sale of the project to an
undisclosed party and declined further comment.)
The Gambit project is not hard to find in Angleton, a small
town of roughly 3,000 people in the middle of the Brazoria National Wildlife
Refuge. But people on the construction site appear to have instructions to
avoid drawing attention or answering questions from passersby. A photographer
who attempted to observe from the front gate was told by a worker that it was a
“secretive project.” White sheets obscured what appeared to be Tesla’s modular
Megapacks.
In Texas, Albert said, it’s common for developers in real
estate or energy to begin projects with several potential partners or
purchasers waiting in the wings. It made sense to him that the project ended up
with the state’s biggest billionaire. “Elon Musk has a lot of activity in Texas
right now,” said Albert. “It wouldn’t surprise me if Musk is thinking about
starting his own power company.”
READ NEXT: After Texas Crisis, Biden’s Climate Plan Hangs on
Fragile Power Grid
No comments:
Post a Comment