Tesla Signs Landmark Deal for 15 GWh Megapack Valued at Multi-Billion Dollars

While Tesla’s energy storage segment is smaller than its automotive business, it is experiencing significant growth. This segment has quickly accelerated and expanded after maintaining steady growth for years, and recently secured massive Megapack contracts.

Tesla and Intersect Power have signed a contract for 15.3 GWh of Megapacks, Tesla’s advanced battery storage system, for the company’s solar and storage projects through 2030. This agreement, along with previous agreements, puts Intersect Power at the forefront of global buyers and operators of Megapacks. It expects to have nearly 10 GWh of large-scale storage by the end of 2027.

While the cost of the contract was not disclosed, given the massive energy demand, it is a multi-billion dollar deal, depending on the price.

Tesla’s Megapack is a large-scale lithium battery-based energy storage system designed to improve grid stability and prevent power outages. Each unit has a storage capacity of over 3 MWh, enough to power 3,600 homes for 1 hour.

Tesla’s Crazy Battery Storage Growth

Despite the decline in automotive revenue, Tesla has seen growth in other business segments, particularly in energy storage, which is becoming increasingly profitable. As the number of Megapack installations increases and the fleet grows, Tesla expects continued earnings growth in this segment.

In the first quarter of 2024, Tesla’s energy storage deployments reached a record 4.1 GWh. Revenue and gross profit from the energy generation and storage segment also reached record highs.

In Q2 2024, Tesla Energy deployed 9.4 GWh of energy storage products, including Megapacks, Powerwalls, and solar products. This is more than double the amount deployed in Q1 2024 (132% increase) and 157% more year-over-year.

Tesla has previously delivered 2.4 GWh of Megapacks to Intersect Power’s solar and battery storage facilities that are already operational or under construction.

Under the new agreement, more than half of Megapack’s batteries will be used at four major battery installations in California and Texas. They will begin operations by the end of 2027, including some of the largest battery installations in the U.S. The remainder will go to future solar and battery storage projects that will come online between 2028 and 2030.

Mike Snyder, Senior Director of Tesla Energy, said:

“Intersect continues to be an exceptional partner, and their development expertise combined with Tesla’s vertically integrated plug-and-play technology provides the speed and scale needed to increase grid resiliency and support greater integration of renewable energy sources.”

Expanding Intersect Power’s Leadership in Clean Energy Storage

Intersect Power is a clean energy company focused on innovative, scalable, low-carbon solutions. Founded in 2016, the company develops, owns, and operates some of the world’s largest clean energy assets, delivering low-carbon electricity, fuels, and related products to domestic and international markets.

Intersect Power is committed to developing grid-connected renewable energy sources and large clean energy resources, including battery storage, data centers, and green fuels. It has a portfolio of 2.2 GW of operational solar PV and 2.4 GWh of storage.

The energy company is known for its large and flexible battery energy storage systems (BESS) at its solar and storage facilities in Texas and California. The Megapacks are scheduled for delivery in 2025 and 2026 and will be manufactured at Tesla’s Megafactory in Lathrop, California.

Intersect Power currently has 2.4 GWh Tesla Megapacks in service or under construction. This includes 1 GWh at the Oberon solar/storage facility and 448 MWh at the Athos III solar/storage facility in California. An additional 1 GWh Megapacks are being installed at the Radian and Lumina solar/storage facilities in Texas. They are expected to be fully operational within a year.

According to the U.S. Energy Information Administration (EIA), the country’s battery storage capacity has been growing since 2021. It is projected to increase by 89% by the end of 2024, provided that developers deploy all planned battery storage systems on schedule.

Current plans indicate that U.S. battery capacity could exceed 30 gigawatts (GW) by the end of 2024, surpassing the capacity of batteries powered by petroleum, geothermal energy, wood and wood waste, and landfill gas.

Tesla Energy power increases significantly with Megapacks

Tesla Energy also signed a $375 million contract to supply Megapacks for a major battery project in Australia. The agreement will support construction of a 415 MW/1,660 MWh battery, one of the largest batteries in the world with a four-hour runtime.

The Megapacks will be used in Akaysha Energy’s Orana Battery Energy Storage System (BESS), located in New South Wales’ Central West Orana Renewable Energy Zone (REZ).

Tesla Megapacks have made significant inroads into the Australian energy market. In October 2023, a 150 MW/300 MWh Tesla Megapack system was launched in New South Wales.

Earlier this year, a 250MW/500MWh project broke ground in Queensland. Additionally, in April 2024, Tesla Energy was awarded a contract by Neoen to expand Collie Battery, with the aim of turning it into the largest battery in Australia with a final capacity of 560MW/2,240MWh.

This Megapack agreement, alongside Tesla’s significant deal with Intersect Power, highlights the growing demand for advanced energy storage solutions. These partnerships are designed to increase grid stability and support the transition to a low-carbon economy worldwide.