Tesla Strikes Gold with Multi-Billion Dollar Megapack Power Deal

Tesla's Energy Storage Segment Surges with Massive Megapack Contracts

Tesla’s energy storage division may be smaller than its automotive arm, but it is experiencing remarkable growth. The segment has seen rapid expansion, with recent substantial contracts for Megapacks secured. Tesla and Intersect Power have inked a deal for 15.3 GWh of Megapacks, Tesla’s cutting-edge battery storage system, to be utilized in Intersect Power’s solar and storage projects through 2030. This agreement, coupled with prior deals, positions Intersect Power as a leading global purchaser and operator of Megapacks, with nearly 10 GWh of large-scale storage anticipated by 2027. While the financial specifics of the contract remain undisclosed, the sheer magnitude of energy involved suggests a multi-billion dollar deal, contingent on pricing.

Tesla’s Megapack represents a large-scale lithium-based battery energy storage system designed to enhance grid stability and mitigate outages. Each unit boasts a storage capacity exceeding 3 MWh, ample to power 3,600 homes for an hour. Despite a dip in automotive revenues, Tesla has witnessed growth in other business sectors, particularly in energy storage, which is proving increasingly lucrative. With a rising number of Megapack installations and an expanding fleet, Tesla anticipates sustained profit growth in this domain. In Q1 2024, Tesla’s energy storage deployments hit a record high of 4.1 GWh, with revenue and gross profit from the Energy Generation and Storage segment also reaching all-time peaks. By Q2 2024, Tesla Energy had deployed 9.4 GWh of energy storage products, including Megapacks, Powerwalls, and solar products, marking a significant increase from Q1 2024 (132% rise) and a 157% surge year-over-year.

Tesla had previously supplied 2.4 GWh of Megapacks for Intersect Power’s solar and storage facilities, either operational or under construction. The new agreement will allocate more than half of the Megapacks for four major battery installations in California and Texas, slated to commence operations by the end of 2027, including some of the largest battery installations in the U.S. The remaining Megapacks will be earmarked for future solar and storage projects coming online between 2028 and 2030. Mike Snyder, Senior Director of Tesla Energy, lauded Intersect Power as an exceptional partner, highlighting their development expertise in conjunction with Tesla’s integrated technology as vital for enhancing grid resilience and supporting increased renewables integration.

Intersect Power, a clean energy company established in 2016, is dedicated to pioneering innovative, scalable low-carbon solutions. The company develops, owns, and operates some of the world’s largest clean energy resources, providing low-carbon electricity, fuels, and related products for domestic and international markets. Intersect Power is committed to advancing grid-tied renewables and large-scale clean energy assets, including battery storage, data centers, and green fuels. With a portfolio boasting 2.2 GW of operating solar PV and 2.4 GWh of storage, the company is renowned for its expansive and adaptable Battery Energy Storage Systems (BESS) at solar and storage facilities in Texas and California. The Megapacks are scheduled for delivery in 2025 and 2026 and will be manufactured at Tesla’s Megafactory in Lathrop, California.

Currently, Intersect Power has 2.4 GWh of Tesla Megapacks either operational or under construction, including installations at the Oberon and Athos III solar and storage facilities in California, and at the Radian and Lumina facilities in Texas. These Megapacks are anticipated to achieve full operational status within the year. According to the U.S. Energy Information Administration, battery storage capacity in the country has been on the rise since 2021, projected to increase by 89% by the end of 2024 if developers adhere to their planned schedules. The U.S. battery capacity is expected to surpass 30 gigawatts by the end of 2024, exceeding capacities of other energy sources like petroleum liquids, geothermal, wood waste, and landfill gas. Developers are aiming to bring over 300 utility-scale battery storage projects online in the United States by 2025, with approximately half of these planned installations located in Texas.

In a significant move, Tesla Energy has secured a $375 million contract to supply Megapacks for a major battery project in Australia. This agreement will support the construction of a 415 MW/1660 MWh battery, one of the world’s largest four-hour duration batteries, for Akaysha Energy’s Orana Battery Energy Storage System in New South Wales. Tesla Megapacks have been making notable strides in Australia’s energy market, with previous projects commissioned in New South Wales and Queensland. Additionally, Tesla Energy was recently awarded a contract to expand the Collie Battery, aiming to make it the largest battery in Australia with a final capacity of 560 MW/2,240 MWh. These developments, alongside the significant deal between Tesla and Intersect Power, underscore the increasing demand for advanced energy storage solutions, poised to bolster grid stability and support the global transition to a low-carbon economy.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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