Energy
Tesla “big battery” in Australia is becoming a bigger nightmare for fossil fuel power generators
Tesla’s “big battery” utility-scale Powerpack system at the Hornsdale Power Reserve in South Australia has yielded more than doubled the savings to consumers in 2019 than the year prior as it dominates fossil fuel generators on quicker demand response for the grid.
Hornsdale Power Reserve saved consumers AUD116 million ($75.78 million) in 2019, a big jump from AUD40 million ($26.14 million) savings in 2018.
The Hornsdale Power Reserve, owned and operated by French renewable energy producer Neoen, is home to the largest lithium-ion battery energy storage system in the world with a 100 MW/129 MWh. Tesla Powerpack has been playing a significant role in grid stability since its installation in 2017, a function previously dominated by fossil fuel generators that bring energy prices high during system faults of planned maintenance.
“Hornsdale has just been the best asset for the state, and for us as well, it’s a real success story,” head of development at Neoen Australia Garth Heron said in an interview with RenewEconomy. We have shown that these kinds of systems can work. It saves consumers a lot of money, and it’s something we should be rolling out right across the market.”
The system that covers approximately one hectare of land at the Hornsdale Wind Farm provides grid stability to consumers, storing excess energy during off-peak periods and supplying the grid when renewable outputs are low. When a power plant goes down or when there is greater demand for energy, it is practically a race to meet that demand. Tesla battery-powered HPR beats power providers dependent on fossil fuel and gives consumers a win-win scenario. Consumers benefit from the lower prices of HPR and blackouts that can disrupt businesses or daily household activities are avoided. As South Australia shifts to renewable energy, fossil fuel power generators that did not have potent competition before in the market are now forced to bring their prices down back from the orbit.
A report by Australian consulting firm Aurecon analyzed the impact of the Tesla big battery at Hornsdale Power Reserve in its role in the Frequency Control and Ancillary Services (FCAS) markets. These are basically events that require quick reactions when there are sudden changes in demand or supply.
For example, when the Australian Energy Market Operator called for 35MW of FCAS in January, the Tesla big battery was quick to respond and kept prices reasonable. The prices were as low as AUD270 ($176)/MW instead of hitting AUD11,500($7,511)/MW to AUD14,000($9,143)/MW if supplied by the fossil fuel-dependent generators. When South Australia was “islanded” because of a major outage in Victoria, the HPR was able to save consumers AUD14 million in five hours.
According to Aurecon, the biggest savings came from the raised FCAS and amounted to more than AUD50 million ($32.65 million).
The Hornsdale Power Reserve also has a significant impact on FCAS market regulation. Tesla battery use has pushed the average prices from AUD450 ($294)/MWh two years before the installation of HPR to just over AUD20 ($13)/MWH. With lower prices, battery-generated power practically brought fossil fuel power plants, that ruled the region like cartels, to their knees.
Tesla battery has demonstrated how lithium-ion battery power reserves can play a big role in the security of the overall grid. While fuel fossil-powered generators will take several minutes to feed power to the grid in need, the HPR’s fast-discharge capability beat these options and give consumers access to more affordable energy. This also bodes well for owner and operator Neoen to make most of the potential returns, and of course, for Tesla’s energy business.
Tesla’s big battery has proven that battery storage is a practical option on a grid-scale. And it’s very profitable. The state government only injected AUD4 million ($2.61 million) into the multi-million project.
During the final quarter of 2019, the revenue of the Hornsdale Power Reserve jumped by 56%.
The HPR also announced plans to expand its capacity by 50%, boosting it by 50MW/64.5MWh. The project is expected to be completed in the first half of 2020 and will provide stabilizing inertia services critical to the shift to renewable energy in the region, and help push Australia closer to its goal of being net 100% renewable by 2030.
With the numbers clearly showing the benefits of Tesla’s big battery, it is not just a big banana as Australian prime minister Scott Morrison once said.
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.
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