Energy
Tesla’s big battery in Australia is starting an energy storage movement
Tesla’s big battery in South Australia, officially known as the Hornsdale Power Reserve, has been supporting the region’s beleaguered energy grid since it went online last year. Over the past months, the Powerpack installation has been proving that large-scale battery storage solutions could be preferable alternatives to fossil fuel-powered backup plants.
Almost two years ago, SA experienced a state-wide blackout that highlighted the region’s need for a facility that can provide backup to the grid. A Twitter conversation between two billionaires, Australian software pioneer Michael Cannon-Brookes and Tesla founder Elon Musk, ultimately started the initiative that would eventually become the massive Powerpack farm. Musk even wagered that Tesla could complete the 100MW/129MWh facility in 100 days or it would be free.
The timeline was ambitious, and unsurprisingly, it attracted a slew of critics, some of whom claimed that batteries could not be built that big or that quick. In the same month as Elon Musk and Michael Cannon-Brookes’ conversation on Twitter, for example, the Australian Energy Market Operator (AEMO) issued a report suggesting that the maximum size of a utility-scale lithium-ion battery would be 1MW. The report was published not long after then-AEMO chairman Tony Marxsen stated that utility-scale batteries were about 10 to 20 years away from providing meaningful contributions to the grid. The Minerals Council of Australia, the country’s primary coal lobby, also suggested that a large-scale battery installation would take at least one year to design and two years to build.
Tesla completed the 100MW/129MWh Powerpack farm within Elon Musk’s ambitious timeline, six months after the “billionaire tweets” and just 62 days after Telsa signed the connection agreement with the market operator and network owner. Even as the battery started its operations, though, the facility still attracted a notable number of critics. Prime minister Scott Morrison ridiculed the Hornsdale Power Reserve, comparing it to tourist attractions such as the Big Banana in New South Wales. Resources Minister Matt Canavan also dubbed the big battery as the “Kim Kardashian” of the energy market.
Amidst the skepticism, the SA big battery has proven its worth many times over. Even before its official launch, the Powerpack farm was called into action, injecting 70MW of stored wind energy into the market. Two weeks after it was officially opened, it stepped in when a unit at Loy Yang coal generator in Victoria tripped. Just last month, twin lightning strikes caused widespread outages in three states, and the Queensland and South Australia grids had to be islanded. Queensland’s backup hydro plants and coal generators struggled to respond to the unexpected event, while South Australia, supported by the Tesla Powerpack farm, emerged from the incident unscathed.
The Hornsdale Power Reserve and its success so far has encouraged a series of similar battery storage projects in Australia. The Ganawarra battery, a Tesla installation paired directly with a massive solar farm, is set to start operations soon. Next to the Wattle Point wind farm, the Dalrymple North battery is expected to go online soon as well. Other battery storage installations are also set to be launched in Ballarat, Whyalla, and in Queensland. And these are just large-scale battery solutions. Initiatives such as the South Australia Virtual Power Plant, which would dwarf than the Hornsdale Power Reserve when completed, have also been given the green light.
It won’t be an overstatement to say that the Tesla big battery has become a project, possibly even the project, which ultimately proved that battery storage is an ideal alternative for fossil fuel-powered backup plants. This was emphasized earlier this month by Tesla CTO JB Straubel, who noted that the improvements in battery storage are starting to affect the market for traditional fossil fuel-powered peaker plants. In an interview with the San Francisco Chronicle, Straubel stated that even at this point, large battery installations are “already outcompeting natural gas peaker plants.”
Tesla Energy usually takes a backseat compared to the company’s electric car business in terms of news coverage, but its progress in battery storage has been notable. In the first six months of 2018 alone, Tesla’s deployment of stationary batteries, which are designed to supply power to residential homes, businesses, and power grids, surged 450%. During the 2018 Annual Shareholder Meeting, Elon Musk also announced that it is aiming to hit a cost of $100 per kWh at the pack level. Considering its recent growth and the success of high-profile projects like the Hornsdale Power Reserve, it won’t be surprising if Tesla Energy eventually catches up and surpasses Tesla’s electric car business in size.
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.
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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.”
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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.
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