Energy
Tesla Energy, battery storage broke new ground in 2018, and 2019 will be even better
Visionaries like Elon Musk, who are aiming for a world powered by sustainable energy, would be proud of the industry’s progress in 2018. Over the course of the year, investments flowed into research, the prices of batteries declined, governments across the globe supported clean energy solutions, and electric vehicles such as the Tesla Model 3 led the charge in transitioning the transportation sector away from fossil fuels.
A study from Bloomberg New Energy Finance has noted that in 2018, global annual energy storage more than doubled, reaching 9 GWh, and it is currently on pace to rise another 78% this year. In August 2018, the cumulative sales of electric cars passed the 4 million mark as well, and NEF analysts expect the EV industry to surpass 5 million in sales in the first quarter of 2019. Even in the United States, where companies like Tesla are struggling to meet the demand for their residential energy products, deployments on a rated-power basis across the country rose 57% to an estimated 338 KW after three years of flat to negative growth.
At the core of all this growth are the advancements in battery technology. Producers of batteries have ramped their operations to meet increasing demand, from China’s BYD Co. Ltd. to South Korea’s LG Chem to Japan’s Panasonic Corp. and its US partner Tesla. Benchmark Mineral Intelligence notes that by 2028, the combined manufacturing capacity of these battery producers would likely reach at least 1,330 GWh. That’s about ten times greater than the entire’s industry’s total capacity entering 2018.
In an email to S&P Global Market Intelligence, Simon Moores, managing director of Benchmark Mineral Intelligence, mentioned that the scale of recent battery projects signifies a change in the market. Moores also pointed out that while the emergence of electric cars is notable, the rise of energy storage has been impressive as well.
“When you see projects now being planned at over 1 GWh in scale, when only 18 months ago a 300-MWh installation was something to behold, you know you have entered a new era. It has been quite interesting to watch the battery makers’ dilemma of where to send the lithium-ion cells. Of course, they have contracts to honor with automotive producers, but the order inquiries from [energy storage] producers have been incredible,” Moores said.
One thing that is working in favor of renewables today is the falling prices of batteries and clean energy as a whole. Tom Buttgenbach, president and CEO of developer 8minutenergy Renewables LLC, described this in a statement to S&P Global Market Intelligence.
“I can beat a gas peaker anywhere in the country today with a solar-plus-storage power plant. Who in their right mind today would build a new gas peaker? We are a factor of two cheaper,” he said.
Buttgenbach’s statements echo the words of Tesla Chief Technology Officer JB Straubel, who noted last year that the age of fossil fuel powered peaker plants is at an end. Speaking to the San Francisco Chronicle, Straubel stated that batteries, even at their current state, are already starting to prove themselves as superior to conventional energy solutions.
“I think what we’ll see is we won’t build many new peaker plants, if any. Already what we’re seeing happening is the number of new ones being commissioned is drastically lower, and batteries are already outcompeting natural gas peaker plants,” the Tesla CTO said.
While the progress of batteries has been impressive, though, Logan Goldie-Scot, head of energy storage at Bloomberg NEF, has stated that the past year exhibited uneven growth among different regions across the globe. South Korea, for one, saw a rise in energy deployments, while territories like the United Kingdom took a step back. In the United States, extreme demand such as those faced by Tesla Energy for products like the Powerwall 2 also caused delays in installations. Yet, despite these, Goldie-Scot stated that 2018 was a turning point for energy storage nonetheless.
“Even though progress was uneven, there was a much greater consensus in 2018 over the importance of energy storage, even in the near term, in major markets. In 2017, there were still a lot of people talking about how energy storage was not necessarily a competitive solution and was going to be limited. I hear those conversations much less now. Energy storage is now becoming more integrated into resource plans,” she said.
Amidst this transition, companies such as Tesla are taking the battle to heart. Last November, for example, Tesla opened the doors of Gigafactory 2 in Buffalo, NY to select members of the media. During the media visit, Tesla noted that it is aiming to ramp operations in the site with more hires, and that the 1.2-million sq ft facility is already running 24/7, with employees alternating 12-hour shifts. Tesla’s Gigafactory 2 is expected to play a huge role in the company’s energy business, considering that it is the site where the Solar Roof tiles, the company’s flagship solar product, are being manufactured.
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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