Tesla won the massive energy deal in South California

When talking about Tesla’s (NASDAQ: TSLA) gigafactory, building Model 3 is only part of its whole business. From Musk’s version, it should also be a base for producing its energy product. Taking over of solar city and consolidate its own battery business are all the parts of the company’s future plan. Currently, the new deal with the government by providing energy storage service just put this plan forward.

Tesla just won a bid to supply grid-scale power in Southern California to help prevent electricity shortages following the biggest natural gas leak in U.S. history. The Powerpacks, worth tens of millions of dollars, will be operational in record time—by the end of this year.

Tesla Motors Inc. will supply 20 megawatts (80 megawatt-hours) of energy storage to Southern California Edison as part of a wider effort to prevent blackouts by replacing fossil-fuel electricity generation with lithium-ion batteries. Tesla’s contribution is enough to power about 2,500 homes for a full day, the company said in a blog post on Thursday. But the real significance of the deal is the speed with which lithium-ion battery packs are being deployed.

“The storage is being procured in a record time frame,” months instead of years, said Yayoi Sekine, a battery analyst at Bloomberg New Energy Finance. “It highlights the maturity of advanced technologies like energy storage to be contracted as a reliable resource in an emergency situation.”

The deal fits into Tesla Chief Executive Officer Elon Musk’s long-term vision of transforming Tesla from an an electric car company to a clean-energy company. That’s the same motivation behind his pending deal to acquire SolarCity Corp., the rooftop solar company founded by his cousins, of which he is also chairman and the largest shareholder.

In total megawatt hours, the Tesla batteries will make up the biggest lithium-ion battery project in the world, though it will soon be surpassed by others under contract, according to data compiled by Bloomberg New Energy Finance.1 A Tesla spokeswoman declined to comment on the value of the 20 megawatt deal. According to Tesla’s website, a 2-megawatt Tesla battery system costs about $2.9 million, and any contracts greater than 2.5 megawatts must be negotiated directly with the company.

In August, California regulators approved two contracts for AES Corp. to build 37 megawatts of grid-scale energy storage systems to address anticipated power shortfalls stemming from the Aliso Canyon leak. Canadian energy company AltaGas Ltd. also won a 20 megawatt (80 megawatt-hour) contract with Southern California Edison to be completed this year. The clean energy is winning the bid from government is believed to grow further in the future. Even though the current energy price hits a historical low level, more regulations and preferences to clean energy just do a huge favor to clean energy industry. Tesla is not the only winner but the company is proved so visionary that every step it made just begin to work right now.

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