Elon Musk is entering the Texas electricity market, with the as yet undisclosed construction of a gigantic battery connected to a struggling power grid that nearly collapsed last month. The move marks Tesla Inc.’s first major foray into the epicenter of the US energy economy.
A Tesla subsidiary registered as Gambit Energy Storage LLC is quietly building a more than 100 megawatt energy storage project in Angleton, Texas, a town about 40 miles south of Houston. A battery of this size could power around 20,000 homes on a hot summer day. Workers at the site kept the equipment safe and discouraged onlookers, but a Tesla logo could be seen on a worker’s helmet and public documents helped confirm the company’s role.
Ownership records filed with Brazoria County show that Gambit shares the same address as a Tesla facility near the company’s auto plant in Fremont, California. A filing with the United States Securities and Exchange Commission lists Gambit as a subsidiary of Tesla. Tesla executives did not respond to multiple requests for comment.
As winter storms hit Texas in February and left millions of people without power for days, Musk took to Twitter to poke fun at the Electric Reliability Council of Texas, or Ercot, the non-profit group. profit which manages the flow of electricity to more than 26 million customers. “Don’t earn this R,” he wrote. Musk, 49, recently moved to Texas and his various companies are expanding their operations in the state.
The battery storage system built by Tesla’s Gambit subsidiary is registered with Ercot. Warren Lasher, senior director of system planning at Ercot, said the project has a proposed commercial operation date of June 1. The site is adjacent to a Texas-New Mexico electrical substation.
While Tesla is known for its sleek, battery-powered electric vehicles, it has always been more than a car maker: its official mission is “to accelerate the world’s transition to sustainable energy.” Large-scale batteries are needed to store electricity produced by wind and solar, but they can also become lucrative opportunities. By storing excess electricity when prices and demand are low, battery owners can sell it back to the grid when prices are high.
Tesla has spent years developing in residential energy technology. In March 2015, Musk unveiled a home drum product, dubbed the Powerwall, with a sensational event at his design studio near Los Angeles. Dozens of executives from utilities and energy attended. A year later, Tesla acquired SolarCity, the solar panel installer founded by Musk and his cousins. Musk then peddled a “solar roof” that has gone through several iterations without becoming a serious competitor in the market.
But the company’s product line is already expanding beyond the home and into the power grid. The Tesla Powerpack and even larger Megapack were designed with utility customers in mind. Tesla’s battery project in South Australia, launched in 2017, is adjacent to a wind farm and can store excess electricity generated at night gusting for daytime demand. With 100 megawatts, it was the largest battery project in the world when it launched.
While Tesla’s focus on energy often takes a back seat to the increasingly competitive business of making and selling electric cars, Musk and his management team continue to put the emphasis on energy forward as a key element of their growth. “I think in the long run Tesla Energy will be roughly the same size as Tesla Automotive,” Musk said on a July 2020 earnings call. “The energy sector is collectively larger than the automotive industry.”
Tesla’s batteries are connected to the Mira Loma substation in Southern California Edison, located east of Los Angeles. The 20-megawatt system, online since December 2016, supports grid operation during peak hours and helps the utility make the most of its renewable resources. In the San Francisco Bay Area, PG&E Corp. and Tesla are building a 182.5 megawatt system at an electrical substation in Moss Landing that is expected to be operational by August.
Tesla Energy could account for up to 30% of the company’s total revenue by the 2030s, up from around 6% today, according to Piper Sandler analyst Alexander Potter. His research highlighted the potential of Autobidder, a Tesla software platform designed for utilities. Tesla CFO Zachary Kirkhorn described Autobidder as an “autonomous energy market participation system that trades at high frequency.” Potter has a target price of $ 1,200 on Tesla stock, the highest on Wall Street.
“As a percentage, Tesla’s energy storage business is growing faster than its automotive business, and that will only accelerate,” said Daniel Finn-Foley, energy storage manager at Wood MacKenzie Power and Renewables. “They are absolutely respected as a player and they compete aggressively on price.”
Musk’s Empire has many branches in Texas, and with the billionaire’s recent relocation from California, the Lone Star State now looks set to become the center of his universe. Space Exploration Technologies Corp., or SpaceX, is building and testing Starship, a new rocket and spacecraft designed to bring humans to Mars, at a facility in Boca Chica, on the southern tip of the Gulf Coast. Another rocket testing facility is located at McGregor, near Waco.
SpaceX has posted engineering jobs in Austin for a “new state-of-the-art manufacturing facility” for Starlink, a space-based high-speed Internet service. Tesla is also building a new factory in East Austin for its upcoming Cybertruck, an electric pickup. Gigafactory Texas, as the facility is known, will create 5,000 mid-level manufacturing jobs and is expected to produce the first vehicles by the end of this year.
Musk’s focus on Texas comes as the dominant energy hub of the United States – with its abundant natural gas, oil, solar and wind resources – is transformed by the rapid growth of renewables. For more than a century, the Texas grid has transported electricity from large power plants to customers over miles of transmission lines. Recent storms have highlighted just how fragile this legacy system is in the age of climate change. With the construction of giant batteries like those made by Tesla’s Project Gambit and others, the state’s electricity grid could be remade around distributed generation that could prove to be more resilient.
Approximately 2,100 megawatts of battery storage and 37,000 megawatts of solar and wind power are at an advanced stage of connection to the Ercot grid. “It’s not only amazing, but the funding is already in place,” Jigar Shah said on March 2, a day before the clean energy pioneer was appointed director of the US Department’s loan finance office. energy.
The Gambit project was originally developed by San Francisco-based Plus Power, a privately-held renewable energy company that operates batteries in several states. Scott Albert, the former city manager of Angleton, said it was obvious Plus Power was working with Tesla. A summary of the project available on the city’s website features images of Tesla’s large-scale battery products, and some of Plus Power’s key staff have previously worked at Tesla. (Plus Power has confirmed its sale of the project to an undisclosed party and declined to comment further.)
The Gambit Project is not hard to find in Angleton, a small town of about 3,000 people in the middle of the Brazoria National Wildlife Refuge. But people on the job seem to have instructions to avoid attracting attention or answering passersby questions. A photographer who attempted to observe from the front door was told by a worker that it was a “secret project”. White sheets obscured what appeared to be Tesla’s modular Megapacks.
In Texas, Albert said, it’s common for real estate or energy developers to start projects with multiple partners or potential buyers on hold. It made sense to him that the project would end with the state’s biggest billionaire. “Elon Musk has a lot of activity in Texas right now,” Albert said. “It wouldn’t surprise me if Musk plans to start his own power company.”