Energy
Could Tesla really rebuild Puerto Rico’s grid with batteries and solar?
Puerto Rico remains largely without electricity after hurricane Maria ripped through the island and destroyed much of its electricity grid. With rebuilding efforts underway from both non-profits and governmental aid, the U.S. territory has been able to reactivate just over 12% of the electricity grid and expects 25% of the grid to be online in the next month. Reconstruction of transmission lines and electrical infrastructure is expected to cost upwards of $5 billion, according to Ricardo Ramos, chief executive of Puerto Rico’s Electric Power Authority. With a public utility service that’s strapped in massive debt and linked to a bankruptcy filing in July, major funding for the crucial project to rebuild remains largely unknown.
Concept image of Tesla’s scalable battery storage solutions (Photo: Tesla)
While the U.S. government has failed to help restore power on the island, Tesla CEO Elon Musk is up for the challenge. In response to a question that asked if the billionaire entrepreneur would be able to restore power to Puerto Rico using independent solar and battery systems, Musk said, “The Tesla team has done this for many smaller islands around the world, but there is no scalability limit, so it can be done for Puerto Rico too. Such a decision would be in the hands of the PR govt, PUC, any commercial stakeholders and, most importantly, the people of PR.”
This caught the eye of Puerto Rico Governor, Ricardo Rossello, who suggested that the island could become Tesla Energy’s flagship project.
With 3.4 million residents on the island that use roughly 19 billion kWh of energy per year (19 million MWh), or an average of 5,310 kWh (5.2 MWh) per capita, building a Tesla solar and battery solution to meet some of the island’s needs will easily exceed the complexity and cost of Tesla’s existing massive battery project in Australia.
The Tesla Solution
According to the U.S. Energy Information Administration, Puerto Rico consumes 19 billion kWh of electricity per year with 96.4% of it being produced by fossil fuel generators. The other 3.6% is from renewable energy sources.
For the sake of coming up with some hypotheticals, let’s assume that Puerto Rico transitions at least 40% of its power generation to solar energy. To meet that goal, Tesla would need to install a 4,164 MW solar system (factoring in available sun hours), or roughly 5.2% of total global solar deployments in 2017, which is about 320 times larger than the solar plant that Tesla built in Kauai.
Tesla’s Solar and Battery project in Kauai
While it’s difficult to calculate the exact cost of a project of this caliber, we can still make some general estimates that are based on comparable projects and standard rates. In Q3 2016 SolarCity reported that its installation costs, excluding marketing and general administrative costs, were approximately $2 per watt-hour. Based on this assumption, a solar system for Puerto Rico could cost upwards of $8.32 billion.
Tesla would also be installing batteries to help balance the solar power generation and stabilize the grid. A Tesla battery storage solution in Puerto Rico of this size would far exceed the company’s existing “world’s largest lithium-ion battery” project in South Australia. Tesla would likely need a 5,000 MWh (5,000,000 kWh) battery system to support the installed solar.
Musk had previously said that projects over 100 MWh can expect a price of $250 per kWh. For a project of this size, Puerto Rico would be buying $1.25B worth of batteries from Tesla.
To put the size of the project in perspective, it’s worth noting that Tesla’s solar division (formally SolarCity) installed nearly 900 MWh of solar in 2016 and nearly 2,400 MWh over its history. The company is also expanding both solar and battery production at Gigafactory 1 and 2, both of which will help reduce costs over time as economies of scale are realized.
The real cost…
While projects as large as a proposed Tesla solution in Puerto Rico may seem incredibly expensive at first, it’s important to look at them with the right lens. Right now, households in the region pay $.198 per kWh, over 50% higher than the US average.
The total cost of solar and batteries would be $9.58B and would supply 40% of the island’s energy for decades. With Puerto Rico’s poor credit rating and high debt, financing this project won’t come easy, nor cheap. Factoring in a presumed 7% interest rate and the total project cost would exceed $21B over 20 years. In exchange, households would see a price drop in cost per kilowatt-hour to around $.112, as Puerto Rico transitions to a cleaner energy source with a more stable grid.
This project would clearly require a substantial investment in money and labor, something Musk doubters would find too large of scale for the company to tackle. But then again, when compared to building a network of massive rockets that would transport people across the world and eventually to Mars, a large-scale battery and solar system doesn’t seem all that difficult.
Energy
Tesla Energy celebrates one decade of sustainability
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy recently celebrated its 10th anniversary with a dedicated video showcasing several of its milestones over the past decade.
Tesla Energy has gone far since its early days, and it is now becoming a progressively bigger part of the company.
Tesla Energy Early Days
When Elon Musk launched Tesla Energy in 2015, he noted that the business is a fundamental transformation of how the world works. To start, Tesla Energy offered the Powerwall, a 7 kWh/10 kWh home battery system, and the Powerpack, a grid-capable 100 kWh battery block that is designed for scalability. A few days after the products’ launch, Musk noted that Tesla had received 38,000 reservations for the Powerwall and 2,500 reservations for the Powerpack.
Tesla Energy’s beginnings would herald its quiet growth, with the company later announcing products like the Solar Roof tile, which is yet to be ramped, and the successor to the Powerwall, the 13.5 kWh Powerwall 2. In recent years, Tesla Energy also launched its Powerwall 3 home battery and the massive Megapack, a 3.9 MWh monster of a battery unit that has become the backbone for energy storage systems across the globe.
Key Milestones
As noted by Tesla Energy in its recent video, it has now established facilities that allow the company to manufacture 20,000 units of the Megapack every year, which should help grow the 23 GWh worth of Megapacks that have already been deployed globally.
The Powerwall remains a desirable home battery as well, with more than 850,000 units installed worldwide. These translate to 12 GWh of residential entry storage delivered to date. Just like the Megapack, Tesla is also ramping its production of the Powerwall, allowing the division to grow even more.
Tesla Energy’s Role
While Tesla Energy does not catch as much headlines as the company’s electric vehicle businesses, its contributions to the company’s bottom line have been growing. In the first quarter of 2025 alone, Tesla Energy deployed 10.4 GWh of energy storage products. Powerwall deployments also crossed 1 GWh in one quarter for the first time. As per Tesla in its Q1 2025 Update Letter, the gross margin for the Energy division has improved sequentially as well.
Tesla Energy shined in what was a weak delivery report for the first quarter, as the company’s frequently-forgotten battery storage products performed extraordinarily well.
Tesla reported its Q1 production, delivery, and deployment figures for the first quarter of the year, and while many were less-than-excited about the automotive side, the Energy division performed well with 10.4 GWh of energy storage products deployed during the first quarter.
This was a 156 percent increase year-over-year and the company’s second-best quarter in terms of energy deployments to date. Only Q4 2024 was better, as 11 GWh was recorded.
Tesla Energy is frequently forgotten and not talked about enough. The company has continued to deploy massive energy storage projects across the globe, and as it recorded 31.5 GWh of deployments last year, 2025 is already looking as if it will be a record-setting year if it continues at this pace.
Tesla Megapacks to back one of Europe’s largest energy storage sites
Although Energy performed well, many investors are privy to that of the automotive division’s performance, which is where some concern lies. Tesla had a weak quarter for deliveries, missing Wall Street estimates by a considerable margin.
There are two very likely reasons as to why this happened: the first is Tesla’s switchover to the new Model Y at its production facilities across the globe. Tesla said it lost “several weeks” of production due to the updating of manufacturing lines as it rolled out a new version of its all-electric crossover.
Secondly, Tesla could be facing some pressure from pushback against the brand, which is what many analysts will say. Despite the publicity of attacks on Tesla drivers and their vehicles, as well as the company’s showrooms, it would be safe to assume that we will have a better picture painted of what the issue is in Q2 after the company reports numbers in July.
If Tesla is still struggling with lackluster delivery figures in Q2 after the Model Y is ramped and deliveries are more predictable and consistent, we could see where the argument for brand damage is legitimate. However, we are more prone to believe the Model Y, which accounts for most of Tesla’s sales, and its production ramp is likely the cause for what happened in Q1.
In what was a relatively bleak quarter, Tesla Energy still shines as the bright spot for the quarter.
Tesla has chosen the location of its latest manufacturing project, a facility that will churn out the Megapack, a large-scale energy storage system for solar energy projects. It has chosen Waller County, Texas, as the location of the new plant, according to a Commissioners Court meeting that occurred on Wednesday, March 5.
Around midday, members of the Waller County Commissioners Court approved a tax abatement agreement that will bring Tesla to its area, along with an estimated 1,500 jobs. The plant will be located at the Empire West Industrial Park in the Brookshire part of town.
Brookshire also plans to consider a tax abatement for Tesla at its meeting next Thursday.
The project will see a one million square-foot building make way for Tesla to build Megapack battery storage units, according to Covering Katy News, which first reported on the company’s intention to build a plant for its energy product.
CEO Elon Musk confirmed on the company’s Q4 2024 Earnings Call in late January that it had officially started building its third Megapack plant, but did not disclose any location:
“So, we have our second factory, which is in Shanghai, that’s starting operation, and we’re building a third factory. So, we’re trying to ramp output of the stationary battery storage as quickly as possible.”
Tesla plans third Megafactory after breaking energy records in 2024
The Megapack has been a high-demand item as more energy storage projects have started developing. Across the globe, regions are looking for ways to avert the loss of power in the event of a natural disaster or simple power outage.
This is where Megapack comes in, as it stores energy and keeps the lights on when the main grid is unable to provide electricity.
Vince Yokom of the Waller County Economic Development Partnership, commented on Tesla’s planned Megapack facility:
“I want to thank Tesla for investing in Waller County and Brookshire. This will be a state-of-the-art manufacturing facility for their Megapack product. It is a powerful battery unit that provides energy storage and support to help stabilize the grid and prevent outages.”
Tesla has had a lease on the building where it will manufacture the Megapacks since October 2021. However, it was occupied by a third-party logistics company that handled the company’s car parts.
Elon Musk is now a remote DOGE worker: White House Chief of Staff
Tariff reprieve might be ‘Tesla-friendly,’ but it’s also an encouragement to others
Tesla Cybertruck RWD production in full swing at Giga Texas
-
News1 week agoTesla’s Hollywood Diner is finally getting close to opening
-
Elon Musk2 weeks agoTesla doubles down on Robotaxi launch date, putting a big bet on its timeline
-
News6 days agoTesla is trying to make a statement with its Q2 delivery numbers
-
Investor's Corner1 week agoLIVE BLOG: Tesla (TSLA) Q1 2025 Company Update and earnings call
-
Elon Musk2 weeks agoTesla reportedly suspended Cybercab and Semi parts order amid tariff war: Reuters
-
SpaceX2 weeks agoSpaceX pitches subscription model for Trump’s Golden Dome
-
News2 weeks agoDriverless Teslas using FSD Unsupervised are starting to look common in Giga Texas
-
News4 days agoNY Democrats are taking aim at Tesla direct sales licenses in New York