ENERGY STORAGE

How will Tesla's 'gigafactory' affect the grid?

The "gigafactory" that electric automaker Tesla announced last week is superlative in just about every sense. It would be 10 times larger than any lithium-ion battery factory that exists in a facility more than twice the size of the Mall of America, and would round out a Tesla fleet that by 2028 may store more electricity than Mexico uses in a day.

How would this mammoth enterprise affect the electric grid?

Industry watchers agree that if Tesla and its CEO, Elon Musk, are able pull it off, the factory would give Tesla an influential position in industries beyond electric cars. By lowering battery prices and funneling some of them into homes and businesses, Tesla could become a big player in the growing energy-storage market and alter how energy is stored and sold (ClimateWire, Feb. 27).

"If Tesla can become the world's low-cost producer in energy storage," wrote analyst Adam Jonas in a report for Morgan Stanley, "we see significant optionality for Tesla to disrupt adjacent industries," including utilities.

The company claims the facility will break ground later this year in either Arizona, Nevada, New Mexico or Texas in partnership with a major electronics company. It would start operations in 2017, and by 2020 would pump out 500,000 batteries a year, equating to 35 gigawatt-hours of battery cells and 50 gigawatt-hours of finished batteries.

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Tesla said that some portion of this titanic output -- no one knows how much -- will appear in non-wheeled structures like homes and businesses. The most likely sales channel is SolarCity, the nation's leading rooftop solar installer, which in December announced a partnership with Tesla. Musk is also chairman of SolarCity.

SolarCity is leasing the batteries to owners of commercial buildings and to residences on different terms. For businesses, the refrigerator-sized battery is intended to fend off blackouts as well as free the business to buy and sell solar-generated power to the grid when it makes financial sense.

For homes, the 5-kilowatt-hour battery is in the form of two 220-pound Tesla-branded boxes bolted to the wall in the garage. Their sole purpose, at least for now, is to keep the refrigerator and other essential power going in case of a blackout, said Chris Tan, a product marketing manager at SolarCity.

Tesla said it can slash the price of its battery packs by 30 percent by centralizing production and via other tricks it hasn't yet revealed.

Reducing the price of lithium-ion batteries from their current $200 to $300 per kilowatt would hasten the day when electric cars can compete on price with gas-powered cars, said Navigant Research analyst Sam Jaffe. It won't make electricity from stationary batteries as cheap as electricity from the grid, but it would help.

"It's not itself a game changer, but it's making that reduction in battery prices less of a spreadsheet number and more of a real number. Getting the price down toward $200 per kilowatt is going to have an impact on how we run the grid," Jaffe said.

Competing technologies

Tesla's announcements came the same week as a new report suggesting that within a decade, tens of millions of Americans could get their electricity more cheaply from the combination of solar power and batteries than they can from the grid (EnergyWire, Feb. 28).

However, when it comes to powering buildings, Tesla will have competitors that aren't necessarily trying to pack in energy as densely as one must in an automobile. "In the stationary sector, they are competing against dozens of other technologies," such as batteries that rely on zinc-air or sodium-ion chemistries, which are themselves dropping in price, said Brian Warshay, an analyst with Bloomberg New Energy Finance.

One question mark is how Tesla's cars -- and electric vehicles in general -- will interact with the power grid. On the one hand, thousands or millions of electric cars are a significant new load for utilities to handle. On the other hand, there is hope that electric cars could smooth power demand by recharging at night when electricity is more plentiful, or by sopping up extra supply coming from intermittent sources like wind and solar farms.

It's also unknown how an electric vehicle might one day interact with the building that houses it. A Tesla Model S, with its 85-kilowatt-hour battery, could by itself power an average U.S. home for 3½ days.

One thing Tesla claims to know is that the gigafactory itself won't be a grid burden. The giant complex, which Jaffe estimates might suck up a gigawatt of power, is expected to be mostly powered by wind turbines and solar panels sited nearby.

Twitter: @DavidFerris | Email: dferris@eenews.net

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