Tesla out to deliver Lone Star grid a jolt
Battery in works is Texas-sized
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, Calif. 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, the nonprofit group
that manages the flow of electric power to more than 26 million customers. 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 the council. Warren Lasher, senior director of system planning at the council, said the project has a proposed commercial operation date of June 1. The site is adjacent to a Texas-New Mexico Power substation.
SPOTLIGHT ON ENERGY
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 solarpanel 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 the company’s growth. “I think long-term Tesla energy will be roughly the same size as Tesla automotive,” Musk said during an earnings call in 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, Pacific Gas and Electric Co. Corp. and Tesla are constructing a 182.5 megawatt system at an electric substation in Moss Landing that should be operational by August.
Tesla’s energy operation 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.
“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.”
NEW HOME IN TEXAS
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.
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, is expected create 5,000 mid-level manufacturing jobs and is supposed to produce the first vehicles by the end of this year.