Tesla Just Proved How Valuable Energy Storage Can Be
The impact Elon Musk and Tesla (NASDAQ: TSLA) will have on the energy industry may be larger in the power storage segment than anywhere else. Sure, his company is a leader in electric vehicles and residential solar, but in the worlds of automakers and solar energy more broadly, Tesla is a very small player.
Energy storage is another matter: Tesla has been more aggressive in that space, and could take a leadership position very quickly. And its product could very well upend the electricity market as we know it.
Energy storage saves natural gas from itself
The future of energy can be seen in the emergency energy storage system built in Southern California after the Aliso Canyon natural gas storage field’s massive leak late in 2015. Because of that blowout, which released close to 100,000 metric tons of methane into the atmosphere, operations at the facility were curtailed, and there was a chance the region wouldn’t have enough natural gas to meet its energy needs at peak times in the summer, leading to brownouts or blackouts.
Most of the time, the issues at the facility weren’t a big deal relative to California’s power supply, because there was still enough energy overall to meet demand. But there was the potential for a disparity during evening hours, when people get home and turn on their lights, that demand could exceed supply. And that was a concern for the grid operators.
Their solution was to install a large array of batteries that could store energy when it was abundant and easily deploy it to the grid when needed. Sempra Energy’s (NYSE: SRE) San Diego Gas & Electric contracted with Tesla, Greensmith Energy, and AES Energy Storage to build 70 MW of energy storage with 280 MWh of capacity to offset the Aliso Canyon outage. Just six months after the request for proposal went out, the projects were complete.
Energy storage added an incredible amount of value to Southern California’s grid, and it did so in very little time. And proving out these capabilities will allow more energy storage growth in the future.
Filling the needs of a changing power grid
The success of the three energy storage deployments in California is a milestone that shouldn’t go unnoticed. They filled an urgent need for the grid, were rapidly deployed, and provide functionality that will allow more integration of renewable energy sources like wind and solar.