Tesla Wins Large Contract with Utility for Energy Storage

Tesla’s energy storage division just won a very large contract with a major California utility to stabilize power outages.

While the acquisition cost hasn’t been announced, Tesla Energy will supply 20 megawatts of energy storage to Southern California Edison – enough to power about 2,500 homes for a full day. It’s part of SCE’s efforts to prevent blackouts by fossil-fuel electricity generation with lithium-ion batteries. Investment in Tesla’s product, called Powerpacks, is thought to be worth tens of millions of dollars, and is expected to be operational by the end of this year.

The deal ties into Tesla’s plans to broaden its base beyond manufacturing and selling electric cars, similar to its recent investment in SolarCity. It also signifies advancements being made in energy storage, which is reaching a much faster pace – months instead of years, according to an analyst.

“The storage is being procured in a record time frame,” said Yayoi Sekine, a battery analyst at Bloomberg New Energy Finance. “It highlights the maturity of advanced technologies like energy storage to be contracted as a reliable resource in an emergency situation.”

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SCE’s move with Tesla was spurred by a disaster the utility faced beginning about a year ago. A natural gas leak at Aliso Canyon, owned and operated by Sempra Energy and located near Los Angeles’ Porter Ranch neighborhood, released thousands of tons of methane before it was sealed by Sempra in February. Since then, SCE and other utilities have been pursuing energy storage deals to secure energy supply to avoid blackouts and price spikes.

In total megawatt hours, the Tesla Energy batteries will make up the biggest lithium-ion battery project in the world, according to Bloomberg New Energy Finance. That will soon be passed over by other projects under contract, according to Bloomberg data.