Advanced Microgrid Solutions and Tesla will work together to provide up to 500 megawatts of battery backup capacity for utilities and large commercial buildings in California, according to recent news. The Tesla batteries will be used first to provide 50 megawatts of power storage for Southern California Edison.
AMS CEO Jackalyne Pfannenstiel, a former Assistant Secretary of the US Navy, told Bloomberg Business in an interview: “It was very clear from the beginning that Tesla’s was just a standout technology. We intend to use Tesla batteries on a huge number of our projects going forward, and our pipeline is a lot bigger than just the Edison project.”
Kennedy says her company uses the best technology from the best suppliers it can find. “What I like about the Tesla batteries is that they’re so versatile,” she said. “But we’re technology agnostic. We can choose any type of technology.” AMS may use batteries from other manufacturers in the future if they can out-perform Tesla products for particular applications. Kennedy would not reveal the price her company is paying for the Tesla batteries.
Everybody is talking about the Tesla Powerwall residential battery unveiled in April, but the real profit center for Tesla, at least in the immediate future, will be building large-scale battery storage units for AMS and other grid-scale customers. Contracts like this one will give it a ready market for the batteries produced at the Gigafactory in Nevada, where production is expected to begin in late 2016.
Why is grid-scale battery storage such a hot topic today? It all has to do with the nature of electricity — it must be used as soon as it is created or it gets wasted. Until very recently, there have been very limited efficient and economical ways to store it (pumped hydro is the leading way historically, but the locations for that are limited). The problem is, the demand for electricity is not constant. It is low in the wee hours of the morning, then rises as the world wakes up and goes about its daily business. Then it peaks between the hours of 4:00 pm and 8:00 pm. That’s when people get home, turn on the lights, crank up the A/C, cook dinner, and settle in to an evening of watching television or using their computers.
In a conventional grid structure, utility companies have to build auxiliary generating facilities — called “peaker plants” — that can be brought online to meet peak demand and then shut down when demand subsides. Not only are they expensive to build and maintain, they also generate large amounts of greenhouse gasses during the startup process. To make matters worse, EPA regulations often exempt these “peaker plants” from compliance with prevailing air quality standards during startup.
Battery storage is a far more efficient way of meeting the fluctuating demands of the electrical grid. The batteries can be charged at night when demand is low, then called upon to meet higher demand that occurs during the day and into the evening. They save utilities money and that translates into lower bills for customers. They also eliminate the need for “peaker plants” and the pollution they create.
AMS is targeting the owners of large commercial buildings as well as utility companies. “We’re building resiliency into the grid building-by-building,” says Susan Kennedy. “The battery response and software built into it will allow it to switch back and forth from grid power to on site storage seamlessly and quickly without the occupants experiencing any loss in quality.” AMS refers to them as hybrid buildings because they can get their electrical energy from the grid or from on-site batteries, whichever is more economical. Buildings that choose to generate their own electricity with solar panels can lower their utility bills even more.
Everybody wins with large-scale battery storage, especially Tesla.