Tesla’s Part in Battery Storage Ramp Up Points to Future

Battery-sourced power for supply chains is expected to eventually become cheaper and more readily available compared to fossil fuel sources, but a lot depends on pricing and demand before that will happen.

Tesla is among a group of battery storage providers bringing massive electricity storage facilities online in Sourthern California. The ramp up and its success or failure are expected to serve as a test case for battery storage for power grids worldwide in the future.

The build up

In the immediate future, Tesla, AES Corp., and Altagas are bringing major battery storage plants online that will represent 15% of all battery storage capacity that was in place worldwide last year, according to Bloomberg New Energy Finance. The plant builds also represent the most ambitious battery storage project to date.  

Tesla hopes to build grid-scale battery plants at locations around the world. (Photo: Tesla).

Tesla hopes to build grid-scale battery plants at locations around the world. (Photo: Tesla).

The battery storage plants will not use electricity, of course, while energy providers can use the devices to store electricity from renewable power sources as a way to replace fossil fuel-derived energy. In the immediate term, batteries can store electricity generated from other non-renewable sources, such as from natural gas. The devices can serve as backup power alternatives in case of electricity outages or as a less-expensive source of energy when power generators are running at peak loads.

Tesla hopes to deliver 15 gigawatt hours of battery storage a year by 2030, which could total the output of several nuclear power plants, according to Bloomberg New Energy Finance. However, Bloomberg New Energy Finance Yayoi Sekine told EBN he thought Tesla’s goal could be overly ambitious. “While I find the delivery on [ Tesla’s battery storage] contracts impressive and a great industry win, there are many other hurdles to be overcome in the energy storage space before significant ramp-up takes place,” Yayoi Sekine told EBN.

AES is building a 100 MW energy storage array   for Southern California Edison (SCE) that is three times bigger than the 30 megawatt pilot plant in Southern California it is currently testing and five times bigger than Tesla’s 20 MW plant slated for completion in 2021. The plant Altagas is building in Southern California will have similar capacity as Tesla’s.

Critical mass

Battery storage’s adoption as a mainstream power source is expected to occur sometime in the future. But both battery and renewable energy prices must fall significantly before battery storage units become an integral part of energy grids for supply chains worldwide.

For example, solar and wind power should one day become the cheapest sources of power for most of the world, but not before 2030, according to Bloomberg New Energy Finance, while the solar power industry already employed more workers than the coal, gas, and oil sectors did in 2016, according to the U.S. Department of Energy (DOE).

According to Bloomberg New Energy Finance, the costs of new battery grids would need to fall by almost half in order for the battery production plants Tesla, AES Corp., and Altagas are bringing online in California to become profitable, but this is unlikely to happen before 2028, according to Bloomberg New Energy Finance.

“Batteries are still quite expensive, while we expect costs to fall in the future as demand for lithium-ion batteries ramp up,” Sekine said.

Battery storage services do not yet command prices they need for them to become profitable but that will likely change, Sekine said.

“Batteries can provide additional locational, emergency, non-emitting, and bill management services to end customers and to the grid, which can [save costs] for customers today and in the future,” Sekine said.

The viability of battery storage as a replacement for fossil fuel sources is also tied to geographic location.

“The business case is different in grid-constrained locations like Hawaii, for example, where batteries are a solution to the high levels of solar power generation,” Sekine said. “There is already a clear economic benefit in Hawaii to charge batteries in the middle of the day and to use their charge in the evening when demand peaks.

Future lessons

Tesla’s, AES Corp.’s, and Altagas' battery storage plants should show what is in store in the future not only in Southern California, but in the rest of the world. In the near term, the new battery storage unit capacity will mainly serve as a secondary power source to support fossil fuel-powered grids as described above.

“The main lesson today is that energy storage is ready for use in an emergency,” Sekine said. “Prices are lower and the robust competitive landscape shows that companies are hungry for utility contracts and are ready to bid competitively.”

1 comment on “Tesla’s Part in Battery Storage Ramp Up Points to Future

  1. MarkSindone
    August 29, 2018

    Demand is always there as we know it but who will come forward with the supply? Not every market is feasible to cater to depending on the profit and loss margin that a company is willing to look at. If there is a company that is hopeful of providing what the market needs at the price range that is favourable, then the sector is bound to see success as it progresses along slowly.

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