In Moss Landing, California, PG&E has been working with Tesla to install its Megapack utility-scale

battery storage system.

Once complete, it will help store energy for redistribution during off-hours when solar output

decreases.

California needs generation for our, September, August is our key areas of when we need

storage to be able to capture it during the day and then release it in the afternoon, evenings.

Even as nations around the world set goals to transition to renewables, demand for these

large-scale storage systems is on the rise.

The market size of grid-scale battery storage is expected to become a $15 billion market by

2027.

Now we're seeing in many parts of the world, in California, in Germany, now in China, mandates to

have a certain amount of storage available per unit of renewable energy.

If you look at resource forecasts or resource plans, the expectation is there will be tens of

thousands of megawatts of new energy storage in just California.

Welcome everyone to, basically the announcement of Tesla Energy.

Tesla got into the energy business in 2015 and it's betting it will become increasingly important

for the company. In 2020, it surpassed three-gigawatt hours of energy storage deployments

in a single year, largely due to the popularity of Megapack, like the one being built in Moss

Landing.

I think long term Tesla Energy will be roughly the same size as Tesla Automotive.

I mean, the energy business collectively is bigger than the automotive business.

They have really deep tactical knowledge of batteries, not just the cells themselves, but how

to operate them, how to build a battery management system, how to package them well, make

sure they're in the right kind of thermal window.

The systems have smart technology built into them.

The technology and the way the batteries are actually configured is one thing.

But equally significant at the moment is how you control them.

Tesla has a system called Autobidder that actually chooses what the battery does and when it

does it.

The amount of data we get from each mega pack is phenomenal.

The Tesla product has got a lot of technology built into it.

It's really an answer to one of the big challenges we've got.

We all know that we're transitioning our electricity systems to renewable.

It is the way of the future.

We're going to see a lot of

these.

Energy storage has been around for a hugely long time, but for a very long time, the only real

viable technology was actually the lead acid batteries in our cars.

The one, of course, that was ramping up during those same decades were lithium ion batteries.

The first lithium ion batteries were used in consumer electronics in the late 1990s.

We can thank Sony's Handycam for pioneering this innovation for us.

Lithium ion batteries are now everywhere, from electric vehicles to our phones.

Though there are many other types of batteries in the works, lithium ion is still the most cost

effective for utility scale storage.

In the past, prohibitively high costs have meant that lithium ion batteries couldn't be used at

large scale grid storage levels.

In the past decade alone, according to estimates from BloombergNEF , costs fell about 90

percent.

With the world transitioning to electric vehicles, demand for electricity could be greater than ever

before.

People are moving towards electric vehicles.

Roughly you need twice as much electricity if all transport goes Electric.

And you need three times as much electricity if all heating goes electric.

This is a prosperous future, both for Tesla and for the utilities.

And with the recent failure of the power grid in Texas and brownouts in places like California,

energy storage is becoming necessary to keep power up and running.

There is a new impetus behind building out a stronger, more resilient grid.

We've seen again and again our grid can't handle climate change, can't handle these climate

disasters that are becoming increasingly frequent.

Tesla built one of its storage systems on the Hawaiian island of Kauai in 2017.

In addition to supporting the SolarCity solar farm, it's added more reliability for the utility.

We had our best reliability ever as a co-op last year.

Part of running an electric utility grid is you have to always match every second of the day

supply and demand.

Batteries are amazing at that because batteries are instantaneous.

If you look at some of the events for the batteries responded to, it's gone effectively from

zero to full output in a bit over 100 milliseconds.

And it's just, there's no other technology that can do that.

In the U.S. and around the world, more aggressive energy storage policies are being put in place.

China has mandated energy storage as part of its effort to reach 16.5 percent solar and wind in its

national power targets by 2025.

In Biden's recently unveiled more than two trillion infrastructure package.

There's more than $600 billion earmarked for climate related policies, and that includes $100

billion for the power grid.

President Biden has set 2035 as the 100 percent clean electricity date.

Just meeting that one's going to be not only a big challenge, but also a market opportunity for

all these technologies.

Tesla is one of several companies working on energy storage.

Tesla gets, and they deserve to get, a lot of attention for their effort to build the

Gigafactory facilities.

But there's lots of others.

There's a whole range of startup companies in the storage space.

The majority of grid scale, energy storage, lithium ion battery, energy storage is being built

out by utility companies such as NextEra Energy down in Florida, Duke

Energy. These are a few of the names that are integrating battery storage into their models.

AES Corporation has been working on a number of projects, most notably with Kauai Island Utility

Cooperative. In 2019, it completed a 28 megawatt solar farm with a battery capable of storing 100

megawatt hours. And it just brought a microgrid online at the island's Pacific Missile Range

facility. With the success of these projects, the utility cooperative is working with AES on a new

project to combine solar and hydro for even greater storage capacity.

It's going to have two hours of battery that can handle the solar output.

Well, what's really wild about this one is it's going to also have pump storage hydro power

brought in. Pump storage has been around for decades.

So it's a proven technology, but linking it into an intermittent resource such as solar is a new

thing.

Next to the PG&E and Tesla storage project in Moss Landing, Vistra is also building one of the

largest battery systems at its natural gas power plant.

Phase one of the project was completed in December of 2020, bringing 300 megawatts of

storage capacity online.

Phase 2 will add an additional hundred megawatts when it's completed later this summer.

We need to do everything we possibly can to accelerate the transition to sustainable energy.

You can't really talk about energy storage without talking about Tesla, which of course is the leader

in EVs and also has a big footprint in the energy storage space.

Tesla launched its energy business in 2015 with the announcement of a new battery product.

So this is a product we call the Tesla Powerwall.

It has all of the integrated safety systems, the thermal controls, the DC to DC converter.

It's designed to work very well with solar systems right out of the box.

People in a remote village or an island somewhere can take solar panels, combine it with the Tesla

Powerwall and never have to worry about having electricity lines

And for larger scale applications, Tesla developed the power pack.

What about something that scales to much, much larger levels?

So for that, we have something else.

So we have the Powerpack.

The Tesla Powerpack is designed to scale infinitely.

So you literally make this into a gigawatt hour class solution.

In the summer of 2016, Tesla acquired SolarCity for $2.6 billion.

The deal was controversial and is still the subject of some shareholder suits, but it drove

Tesla to do more in energy storage.

Tesla has unveiled several solar roof tiles and has hyped the product, but installations have not

grown as quickly as expected.

They've had numerous technical setbacks in kind of deploying that product and making it happen in a

solution that works at the right price point that's competitive with conventional rooftop

solar. But, by and large, they've built the right pieces.

They've prioritized it in the right way for consumers.

Just recently, Tesla updated the Powerwall 2, doubling the capacity of energy it can discharge.

All Powerwalls made since roughly November of last year have a lot more peak power capability than

the specification on the website.

The energy is the same but the power is roughly double.

According to the company, demand has been so high, Tesla is now only selling Powerwalls bundled with

its solar products.

We will not sell a house solar without a Powerwall.

A Tesla Powerwall 2 has an energy capacity of 13.5 kilowatt hours.

A Model S has up to a 100 kilowatt hour battery.

Powerpack, its smallest utility scale storage solution, has a capacity of up to 232

kilowatt hours per unit.

This can be scaled up to include several Powerpacks to meet energy needs.

Tesla's first major battery installation near Jamestown, South Australia, had a capacity of 129

megawatt hours.

At the time of its completion in December 2017, it was the largest lithium ion battery storage

project in the world.

The system charges using renewable energy from the Hornsdale Wind Farm and helped bring more

stability to the grid following a significant blackout.

An extreme weather event that happened in September 2016 in South Australia that resulted in

the entire state blacking out.

The response that the South Australian government took to develop and

accelerate the energy plan that they were already working on, was really triggered by that.

Based on studies observing its first and second year of use, Tesla's Australia battery system has

proven to be reliable and has saved the utility company money.

That first years performance, we could see that the battery itself generated revenue of $24

million. But the saving to the electricity system, in terms of how

much more cheaply the frequency control services were provided, was $30 to $40 million.

With the success of this project, Australia is looking to bring more lithium ion battery storage

systems online.

There's quite a few underway now in other parts of Australia and also in South Australia.

Another project Tesla took on was in Kauai, replacing diesel fuel generators that were

supplying power when solar c ouldn't.

In the Hawaiian Islands, one thing was for certain, we had to do something.

We couldn't stay on oil.

All these technologies, every single one we've done, even the higher priced solar ones, have been

cheaper than the alternative of oil.

So they've all saved us money.

The project consisted of a 52 megawatt hour battery and a 13 megawatt SolarCity

photovoltaic system.

Kauai Island utility Cooperative contracted with Tesla to purchase electricity over a 20 year

period for 13.9 cents per kilowatt hour.

It's a great economic thing.

We know we're going to have a fixed price for 20, 25 years on these.

Before we had the technology, when we were heavily oil dependent, our pricing can go up 40,

50 percent from two or three month period as we're riding oil.

Since the Tesla and AES projects, Kauai Island Utility Cooperative has been able to operate

nearly on all renewable energy

Almost every day now, we will go six to eight hours at 100 percent renewable working on,

we call it inverter based technology here where it's batteries running things.

There's not really another grid out there that is doing that.

Similar to Kauai, Tesla completed a project on the island of Ta'u in American Samoa, which was

previously powered by diesel generators.

Tesla installed 5,328 solar panels and 60 Powerpacks and said this would allow the

island to stay powered for three days without sunlight.

Tesla says it will offset the island's use of more than 109,000 gallons of diesel per year.

And when Puerto Rico's utility infrastructure was devastated in 2017 during Hurricane Maria, Musk

took to Twitter suggesting Tesla could help.

In 2018, ongoing outages left Puerto Rico without power.

So Tesla brought in Powerpacks to several critical sites around the island.

Another one of Tesla's early projects went online in December 2016 to help reduce Southern

California's dependency on peaker plants.

In East Los Angeles, the Mira Loma substation has two 10 megawatt systems, which can store 80

megawatt hours.

The site is comprised of 396 Powerpacks.

With the success of these early projects, Tesla developed an even larger capacity solution,

Megapack, which has up to three megawatt hours of storage.

The equivalent of almost 13 Powerpacks or 30 Model S sedans.

Tesla says if scaled to one gigawatt hour of energy storage, that would be enough to power

every home in San Francisco for six hours.

We're working with utilities, large and small, not just utilities, but also just like microgrid and

project developers of all types and building our own projects where it makes sense.

And there's a lot of demand for the product and we're growing the production rates as fast as we

can.

Apple is working with Tesla to build a 240 megawatt hour Megapack at its California Flats

solar farm that powers its Cupertino headquarters.