Earlier this Spring, observers in the world of energy started seeing some mysterious headlines discussing a secret utility-scale battery being built at unprecedented size. Energy storage has long promised to be one of the most transformative technologies within our grasps. Successful integration of energy storage technology, such as grid-sized batteries, would directly shepherd in true energy transition at a scale that’s needed in this critical decade for climate change, in bringing back confidence in energy resilience after major weather events have caused blackouts in recent years, and in the long overdue transformation of our grid infrastructure with modern technology.
So, the headlines focusing on energy storage were not a surprise. And when it was known that the battery being built was the biggest the U.S. energy sector had seen, the ‘where’ and ‘who’ of that project were equally as expected to those plugged into the industry:
What exactly is known about this project at these early stages, and why were Texas and Tesla seen as the perfect pairing in this instance? The writing was indeed on the wall...
Why This Project?
To start with the basics, this energy storage installation is a project run by Gambit Energy Storage, a subsidiary of Tesla. The goal is to build a massive battery in the outer stretches of the Houston area to provide some of the established and desirable functions of battery storage today:
Provide resilience to keep power flowing during minor grid or generator outages;
Ensure frequency regulation to ensure balance between supply and demand;
Optimize the function of energy markets by charging the battery when power supply is in excess and thus more affordable to later be discharged and sold into the grid when demand rises and prices increase; and
Provide avenue where the solar and wind energy resources already plugged into the grid can be used as power sources even during times when the sun isn’t shining and the wind isn’t blowing.
While none of these functions is new or groundbreaking in the world of energy storage, what is unique is the scale at which this grid-tied battery is planned. This battery system would be 100 megawatts, meaning it could theoretically power about 20,000 homes on a hot summer day if generation was suddenly unavailable and the battery was fully charged. No battery of such immense size has been implemented in the United States before.
But much of the ‘why’ behind this project can be tied into the market it’s being placed in: the state of Texas.
Why in Texas?
While the exact planning behind the scenes at Tesla is, of course, shrouded in mystery, it can be reasonably assumed that this type of plan was in the works well before the February 2021 power outages caused by unprecedented winter storms in Texas. Why would that be the case? Well first off, the storms of this past February were by no means the first warning sign to grid stakeholders in Texas that this type of vulnerability existed. In fact, back in 2011 the state saw a similar cold weather streak that wreaked havoc on Texas energy systems: freezing gas wells, unavailable coal plants, and restricted functionality of wind turbines all leading to similar (albeit less extreme) power outages that were experienced a few months back. The fact is, the Texas grid is unique in the United States as it’s much less interconnected to neighbors, it’s regulated within the state, and a myriad of other reasons that give Texas and the regulatory body ERCOT (Electric Reliability Council of Texas) numerous unique challenges (worthy of another post on its own).
Another consideration in choosing Texas as the home to this groundbreaking battery system is the fact that Texas has the possibility to be the true hub for renewable energy in the United States, beyond the capabilities of any other states. The vast area of open land with great wind resources has led Texas to be declared the top wind energy state in the country, producing 25% of the nation’s wind energy, receiving nearly 20% of its in-state generation from wind, and even leading to the fact that if Texas was a country it would be #5 in the world for wind generation!
Despite such great resources, though, the bane of wind energy is that it is still at its core an intermittent and unreliable energy source. The wind can stop blowing at any time, it can become weak for days or more at a time, and for a grid to be reliant on wind energy creates true reliability issues. But energy storage can transform that reality. Once large-scale batteries are plugged into the grid, wind energy can be used to charge up the battery and to portion out that clean energy to be sent to the grid when it’s most needed, rather than instantaneously all at once as it happens to be available. Such opportunity leads to increases in the clean energy percentage of the grid, helps to optimize the fossil fuel plants on the grid so they aren’t constantly ramping up and down in response to whether or not wind energy is available, and creates a more reliable and predictable energy market, all outcomes that truly benefit every stakeholder on the grid.
Meanwhile, Texas is also looking to catch its solar energy profile up to the existing wind energy resources, and energy storage at this scale would only serve to create the same benefits for solar resources and help Texas lean into a renewable future. For a state so closely identified with oil and gas, the ability for Texas to become the renewable energy leader really cannot be overlooked, and innovative and complete energy storage systems are undoubtedly a key component of that clean energy future.
And then, of course, you do need to look at the Texas February power outages to readily conclude that perhaps that situation put an extra urgency behind the move towards energy storage. In foreshadowing of what was to come, Elon Musk poked at the grid operator, the Electric Reliability Council of Texas (ERCOT), on Twitter (a theme you’ll read more about in just a second) by noting:
And the rest of Texas—citizens and leaders alike—were feeling that way for the past few months as well. Many Texans lost power and had to suffer through dangerous cold snaps, many others were hit with absurdly high power bills as an outcome of the unique power market setup in Texas that created problems of its own, and this all pointed to the undeniable fact that a solution was needed. While there are some moonshots out there that people think can transform the utility industry in the decades to come—advanced nuclear designs, hydrogen energy, and others—energy storage is the technology that’s available now and the advanced versions of it are just becoming available to create change today. And that change today is what Texans are demanding.
Why by Tesla?
Tesla, led by billionaire, Tweeter, and cultural force Elon Musk, is of course no stranger to disrupting the energy sector and changing how we think about long established norms. Not only was the Tesla electric car critical in taking the electrification of vehicles to the mainstream, but Musk has a history in investing in residential sized batteries and solar rooftops to try to direct consumers more towards the prosumer.
Elon has admitted that these latter efforts towards solar rooftops paired with batteries failed to even come close to sniffing the success of Tesla Motors, noting there were “significant mistakes” in the early rollout and the product wasn’t up to the necessary standard. But that setback hasn’t steered him away from trying to spark the next revolution on the grid, predicting Tesla’s solar and energy storage business will eventually grow faster than the automobile side of the house did. Given that confidence, it’s no surprise to see Musk doesn’t see his vision stopping at just residential energy storage, but recognizing the real need and value in owning a major part of the utility-scale energy storage market.
And the other key aspect to remember is that this may be Tesla’s first foray for utility-scale battery storage on the U.S. grid, but that does not mean this business area is a new endeavor for them. In fact, Tesla already installed a 100-megawatt battery in Australia in 2017, known as the Hornsdale Power Reserve. The story behind that battery is a neat one, involving a bold proclamation by Elon Musk on Twitter (are you surprised?) that he could install such a massive energy storage system tied to the grid and that he could get it done in a seemingly unthinkable 100 days. Musk was able to deliver on that bet, with such great success that the regional and federal governments funded an expansion of the so-called ‘big battery’ by 50% and the investment in the big battery paid for itself in less than 3 years.
All of this is to say that we should check the scoreboard: the existing players in the U.S. energy storage game have installed 0 batteries at 100 MW. Elon Musk and Tesla succeeded in their first attempt, they and did so with quite a bit of flair. So, it’s really no surprise that in the wake of a spotlight being turned to Texas grid vulnerabilities, Tesla would be the one to step up. And when you consider that many in the industry consider energy storage to be the true key that can unlock the future grid—full of distributed energy resources, prosumers rather than consumers, two-way energy flows on a smart grid, and more—it’s no wonder that Tesla would be the company most willing to step up and fund what others may have called an insurmountable status quo. Truthfully, plenty of intelligent people would have said that no one outside of the ultra-rich would ever own an electric car, but all you need to do is check new car lots and parking garages to see how the innovative company has made a reputation for proving people wrong.
What’s Coming Next?
Now, observers must keep in mind that this 100 MW battery in Texas is actually not yet publicly acknowledged by Tesla or Elon Musk—though Bloomberg, who first reported on the project, has found documents that many indicated “almost undeniably prove a Musk connection.”
Never one to keep a low profile for long or pass on an opportunity for some major press excitement, expect the coming weeks or months to come for some exciting announcements from @ElonMusk, the Tesla PR folks, or otherwise. The imaginative among us might think: “Well if this is what’s already been slipped to the public, perhaps there’s even more exciting details that we don’t yet know.”
But for those details, you’ll just have to wait like the rest of us!
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