
Tesla Wins Contract to Help Power the California Grid - adventured
http://www.bloomberg.com/news/articles/2016-09-15/tesla-wins-utility-contract-to-supply-grid-scale-battery-storage-after-porter-ranch-gas-leak
======
toomuchtodo
I think its important to note, for those who complain Tesla can't compete
against pumped storage or other utility scale storage methods, that Tesla is
able to have this deployed in _3 months_ (this is partly because Tesla can
just drop racks of batteries on site and be up and running, and partly because
of the regulatory environment after the Aliso Canyon natural gas storage
complex leak fiasco).

Edit: This will replace the need for peaker plants first (generators of last
resort, very expensive, only run a handful of hours a year), and as the cost
drops, will slowly push out base load coal and natural gas (by increasing the
capacity factor of solar and wind). "Batteries are the new peaker plants", as
it were. [1] [2] [3]

This is what it looks like when batteries are used to offset fossil fuel
generators (instead of curtailing excess wind and solar, it'll be soaked up by
utility batteries such as these). Frequently, depending on renewables output,
the spot of price of power can go negative. This means someone gets _paid_ to
use that power. This is where utility scale battery storage shines, as its
happy to gobble up that power, being paid to do so, and can later be paid to
release that power when demand is high.

Edit 2: If Tesla can book this revenue in Q3, combined with their vehicle
sales push, they're going to be GAAP profitable for the quarter, which will
allow them to close the Solar City acquisition. Well played.

[1]
[https://en.wikipedia.org/wiki/Peaking_power_plant](https://en.wikipedia.org/wiki/Peaking_power_plant)

[2] [http://www.greentechmedia.com/articles/read/dueling-
charts-o...](http://www.greentechmedia.com/articles/read/dueling-charts-of-
the-day-peaker-plants-vs.-green-power)

[3]
[http://www.bloomberg.com/news/articles/2015-12-22/batteries-...](http://www.bloomberg.com/news/articles/2015-12-22/batteries-
gaining-favor-over-gas-peaker-plants-in-california)

~~~
semi-extrinsic
So this is only financially viable because of Californian risk aversion after
last years gas leak. If you have a reliable natural gas distribution network,
like the rest of the world, batteries don't make any financial sense versus
gas power plants.

I mean, this entire plant can supply 20 MW and will cost somewhere around $20
million. For that price you can buy two General Electric LM2500 gas turbine
generators that can supply 47 MW and will fit in the same space as three 40-ft
shipping containers. (These are basically just aircraft engines modified to
produce electricity.)

So while this particular sale is of course good for Tesla, I don't see how one
can justify this as Tesla "transitioning to a clean energy company". They saw
a profitable, but likely one-time, opportunity localised to CA and they took
it.

~~~
paulyg
Why are people comparing and debating "batteries vs combustion turbines"?
Batteries only store energy and you still need to generate it somewhere.
Probably from a CCGT plant.

And it's not risk aversion. Its buried subtly in the article but part of
SoCal's gas infrastructure is shut down because of the leak. They literally
can't provide enough gas to generate enough electricity for peak demand. So
they will generate over capacity at night, store in the batteries, and
discharge during the day.

Also what seems to be lost here is that Tesla created it's utility battery
products as a renewables play, but are just taking advantage of extra-ordinary
circumstances in this case.

~~~
mikeash
People are comparing them because they serve the same purpose here.

Base and peak loads on the grid can be wildly different. Without storage, if
you want to avoid brownouts or blackouts, your generating capacity needs to
match the peak load, even though you might only hit peak load a few times per
year. The traditional way to handle this is to have power plants that can be
spun up rapidly but sit idle 99% of the time. Because they're idle most of the
time, the electricity they produce is extremely expensive.

Storage (including batteries, but also many other technologies) can substitute
for these plants. You fill the storage when demand is low, then drain it when
demand is high. Yes, the energy still needs to be generated somewhere, but you
can generate it using existing plants during periods of low demand. If this is
cheaper than maintaining peaking plants that mostly sit idle, it's a win.

~~~
paulyg
Yes I know how all that works becuase I worked in the utility industry for
over a decade.

My point was (1) when comparing peakers vs storage you need to consider the
cost of: Off-peak generation + storage cost vs peaker cost. (2) This wasn't a
cost driven thing. This is a demand driven thing.

~~~
mikeash
Off-peak generation is really cheap, though. It doesn't affect the equation
that much. In some places (I'm sure SoCal isn't one of them) it's cheaper than
free sometimes.

And of course it was a cost driven thing. This is the cheapest way to meet the
demand. If there were a cheaper way, they would have taken that.

------
ChuckMcM
One of the things I wish I could buy would be a Bloom Energy 2kW natural gas
fuel cell and a 50kWh LiON battery pack with whole house inverter.

The nice thing about the Bloom fuel cells is very efficient conversion of
natural gas to electricity, the weakness is that it's response time is long
(an hour or more to change its output by 50%). The nice thing about LiOn
battery packs like the ones in Tesla cars are that they respond instantly to
various power demands, can deliver massive amounts of power in a short period
of time, and recharge again and again.

This combination would let me supply _all_ of my house power under all
circumstances using nothing but natural gas. That would take my house
completely off the grid infrastructure for PG&E (although I would still be a
gas customer).

C'mon Elon, make it possible! :-)

~~~
mrfusion
50kwh seems high for your needs. Wouldn't five or ten be enough if you're
constantly replenishing from the fuel cell?

~~~
greglindahl
Not only does Chuck want to own & charge an electric car, but he also wants to
be able to take advantage of many days of sunny weather in a row. A smaller
battery means a bigger gas bill.

~~~
ChuckMcM
Exactly right.

------
1024core
> Tesla's contribution is enough to power about 2,500 homes for a full day

This is < 0.1% of the total number of homes in SoCal, just to put it in
perspective.

~~~
nl
It's pretty important to realize that this isn't the problem that needs
solving.

Batteries aren't great for large amounts of power for long periods of time
(yet). What they are good at is smoothing out the supply curve from
potentially intermittent suppliers like solar and wind, and that is one of the
things that causes price spikes.

~~~
WalterBright
Having real-time pricing of electricity coupled with users who can adapt their
usage automatically to real-time prices will also considerably moderate power
demand.

~~~
flukus
Most peoples electricity usage is relatively inelastic and no one wants the
cognitive overload of checking electricity prices before they put the TV on.

~~~
WalterBright
Oh, I disagree. A/C is very power hungry, and can be adjusted to cool the
house lower than normal during cheap power times and let it go a bit higher
during expensive power times. It can also "pre-cool" when power is cheaper.

The same goes for an electric water heater.

The charger for your Tesla can also adjust when it charges based on power
prices.

The dishwasher/washer/dryer can be set to come on at night when the power
rates dip.

Exterior lights can dim if the power rates go up.

~~~
zaroth
I'm with you all the way up to affecting appliances. The key is the power
shift should be virtually invisible to consumers. You don't turn _off_ A/C,
you just bump up the set point by 1 degree for that 15 minutes. The individual
impact is minuscule, the aggregate impact is leveling out the peak.

But you need everyone to be wired for this in order for a small change to add
up to a big impact. Which isn't worth the cost unless it's mandated. Which is
a political mess.

So we solve the problem another way; with batteries to meet the peak power
demand at a reasonable cost, and not demand a massive IoT network, constantly
monitoring usage and with override control authority.

~~~
yessql
Nest is planning this.

~~~
SamPhillips
They actually already do it, we enrolled in Boston this summer in "RushHour".
They pre-cooled our house 6 times over the summer before a expected peak
demand and gave us a $40 or $50 credit. It was great, we were not home 3 of
those times and the others we didn't notice at the time at all, so it was
basically just free money.

------
mirekrusin
So California gets big rechargeable batteries, interesting.

Does it mean Solar City (pending acquisition by Tesla) will speed up building
Gigafactory and that's how Tesla will deliver it?

And does it mean that the market was wrong with recent Solar City stock drop?

I'm assuming this is just a "pilot" and, if executed happily, can keep
doubling capacity every x months, driving battery prices down, leveraging it
as an further advantage over fossil alternatives.

I'm assuming I'm completely wrong because I don't see any spikes in Solar City
stock prices?

ps. Bit off-topic but when opening this article I've decided to disable
adblock for bloomberg, just because they made bucklescript :P

~~~
nardi
There are two different Gigafactories. Tesla is building the one in Nevada for
batteries, and that's the one you hear about in the news the most often.
SolarCity is building a different Gigafactory for solar panels in Buffalo, New
York.

------
foota
There was a really neat class I took in college on the economics of elctricity
markets, and one of the things you discuss is base vs peak power generating
plants (as discussed other places in this thread)
[https://en.wikipedia.org/wiki/Capacity_factor](https://en.wikipedia.org/wiki/Capacity_factor)
seems to be a nice introduction to the idea.

~~~
contingencies
A few years ago, one of the more interesting responses I had to an
announcement of a project in to modern asset-generic, topology-generic, risk
model-generic, actor-perspective oriented transaction protocols[1] was a US
academic engineer interested in applications to electrical grids and embedded
power systems in resource-constrained environments. I would like to have
continued further and still believe in the currency of such a system
(especially given rapidly evolving, complex risk models in infrastructure
systems of all types), unfortunately my employer had other priorities and I
have not had reason to return to the project. The IFEX protocol notes in
particular may be interesting reading for those in the area, however.

[1] [http://ifex-project.org/](http://ifex-project.org/)

------
h4nkoslo
Musk really does seem to be following his pattern of maximally engaging
government contracts and subsidies.

(That's not necessarily a criticism, just an observation, and one others have
made before.)

~~~
mturmon
I heard Richard Branson's business projects described the same way. (One link:
[https://www.theguardian.com/commentisfree/2013/jun/10/truth-...](https://www.theguardian.com/commentisfree/2013/jun/10/truth-
richard-branson-virgin-rail-profits))

~~~
hkmurakami
Similar to Son Masayoshi of SoftBank. (Wireless spectrum, solar subsidies)

------
KamiCrit
I love Tesla and Elon Musk as much as the next person.

But isn't it a little crazy how much Elon is betting on 18650 lithium ion
batteries.

I really hope I'm mistaken and they have a homemade battery package made up.

~~~
ccorda
They do (although only slightly different), the 2170:
[http://fortune.com/2016/07/27/tesla-bigger-battery-
gigafacto...](http://fortune.com/2016/07/27/tesla-bigger-battery-gigafactory/)

~~~
marvin
Fascinating, thanks for this link. This is a pretty obscure but heavy
decision.

------
pkaye
I wonder what happened to Bloom Energy. Wasn't their technology suited for
this kind of use?

~~~
jonah
[https://news.ycombinator.com/item?id=12511632](https://news.ycombinator.com/item?id=12511632)

------
xyuuu
No doubt that Tesla is a great company although it face many serious problems
right now. Tesla represents tomorrow and future.

------
giovannibonetti
I wish reporters would know that (mega)watts is not an energy storage unit. I
think they mean (mega)watt-hour.

~~~
kayamon
I think they mean Joules.

------
honkhonkpants
Why doesn't Panasonic just cut out the middleman here? Are they afraid of
making their own deals in america?

~~~
tlb
Combining thousands of cells into large packs that don't overheat, catch fire,
leak, or wear out prematurely turns out to be pretty hard.

~~~
greglindahl
I've seen a bunch of HN comments over time claiming that Tesla has no battery
technology, because they don't build the basic cell. Turns out that battery
packs are more than just the cells they're built out of.

------
prawn
From the Tesla blog:

Addressing Peak Energy Demand with the Tesla Powerpack
[https://www.tesla.com/blog/addressing-peak-energy-demand-
tes...](https://www.tesla.com/blog/addressing-peak-energy-demand-tesla-
powerpack/)

------
dragontamer
To put some numbers into perspective. Texas recently purchased 317MW of CAES.

[http://www.apexcaes.com/project](http://www.apexcaes.com/project)

\-----------

Pumped Hydro is 3GW (Giga-watts):
[https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Sta...](https://en.wikipedia.org/wiki/Bath_County_Pumped_Storage_Station)

And has a storage capacity of ~10 hours (that's 30GW approximately).

\---------

20MW isn't exactly "massive" in the utility scale.

------
allendoerfer
I find it weird how technological process sometimes plays out. We have been
complaining for decades about how green energy is unreliable and that we need
innovative storage solutions. And now batteries somehow seem to be good enough
and we are like: "Hey, why don't we put a bunch of batteries in a container?"
Proving ones again that economy trumps technology.

The next really big thing after green energy will be recycling. Not that it
matters to our generation.

~~~
itengelhardt
I think this is very much a success of technology. I see it as battery tech
having advanced enough (at a slow, but exponential rate) to bring us to a
point where this is technologically possible AND economical

~~~
allendoerfer
I guess what I am trying to say is that the future is rather lame and
predictable. When imagining the future we are sometimes thinking there will be
some giant jump forward, while in reality it is just decades and decades of
minimizing microchips, increasing photovoltaic efficiency, improving
batteries. This technology (except the microchip) is from the 19th (!)
century. On top of that we are using some statistical methods and are trying
to emulate neurons.

This has a positive and a negative side: Everything is already there, we just
need to implement it, but this does not really encourage you to dream. There
is no magic. For me that is part the reason why careers like research or
medicine were not attractive to me: You can progress further or save more
lifes by just using stuff that has been here for centuries. I believe
everybody can make a difference, because we are wasting our potential by not
implementing stuff.

I know that this view is oversimplified and there is indeed fundamental
research (e.g. new materials), which leads to some of these gradual
improvements.

~~~
M_Grey
The day a room temp superconductor is developed (and is scalable to mass
production) you'll see that change in a crazy hurry. Assuming we're alive
then, which is probably not a safe assumption. There are a few things like
that which could change the game almost overnight, but a room temp
superconductor would be one of, if not the biggest.

~~~
allendoerfer
Following my hypothesis would suggest that in the end we will "just" gradually
lower the room temperature to -70°C.

~~~
M_Grey
I wasn't expecting to laugh out loud here, thanks!

------
tbarbugli
"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."

Yeah man, what a lucky coincidence your cousin can help you saving the planet!

~~~
Daishiman
This has been his plan for a decade. It was publicly known, no secret
whatsoever.

~~~
refulgentis
Solar City was retconned into a vague document that takes a mile-high view of
the problem. This was unambiguously poor corporate governance, unless you
_completely_ ignore the business side of...the business?

------
Lagged2Death
A positive development, sure. But 80MWH is a little less than the amount of
energy a 1GW power plant produces every five minutes.

I want alternative energy to work, but it's sobering to see the scale of the
problems involved. It doesn't seem to me that laptop batteries scale up so
well. If I were forced to place a bet on the future of grid-scale storage, I'd
look for something else.

------
oneplane
I don't understand why there are so many power grid issues in the USA. It's
not that hard to generate power and make it go from A to B, yet for some
reason (political? commercial? geological?) there seem to be decades of
general issues in generating enough to meet demand. Does someone know what the
actual issue is?

~~~
adventured
Famously the US had an extraordinary power grid for many decades. Among the
most reliable of any nation. Blackouts used to be very rare in the US, now
they're still rare but not nearly so.

Since the 1980s there has been a significant under-investment in the grid.
Since the 1970s there has been a significant under-investment in production.
The outcome to that is what you see now.

Good article on the rising blackout phenomenon from 2010:

[http://www.cnn.com/2010/TECH/innovation/08/09/smart.grid/ind...](http://www.cnn.com/2010/TECH/innovation/08/09/smart.grid/index.html)

~~~
icc97
Musk was commenting on this point in his YC interview yesterday. There can be
no assumption that technology will always get better. If people aren't
focussed on improving it then the current level of the technology will fall.

------
esemor
I think Tesla is a better contractor than when California tried something
similat with Enron in the late 90's.

------
Faaak
"will supply 20 megawatts (80 mWh) of energy"

Confusing milli and mega is not very serious for bloomberg..

~~~
tantalor
Also, watts = power, not energy

------
PatentTroll
It isn't mentioned in the article, but one of the advantages of something like
battery storage is the ability to regulate consumption and production on a
millisecond timescale to regulate grid frequency. Anyone know if that is a
part of the project here?

------
nraynaud
So maybe it's time to re-open the debate on AC vs DC in power distribution? :p

~~~
zymhan
This was brought up in a Fresh Air interview I listened to recently. Nowadays
most of our devices use DC, and our grid is also on the verge of becoming much
less centralized.

You could reap some easy efficiency gains by omitting the DC-AC-DC conversion
of a solar panel powering a house that charges a laptop.

~~~
JoeAltmaier
DC sucks for transmission over more than a few meters. I'm thinking, even in a
house, you still want AC in the walls.

~~~
nraynaud
can you explain a bit more?

~~~
JoeAltmaier
Heat in wire is ~ current squared times resistance. If you use low-voltage DC,
and you're supplying any significant power, then the current is high and the
losses to wire heating are high. Inefficient _and_ dangerous (fires).

AC at high voltage can be low current, you can use much smaller wires for a
given power.

~~~
hx87
DC doesn't have to be low voltage though. Before high power solid state
electronics became reliable, it was difficult to do DC-DC voltage conversion
without going through AC first, but that isn't true today. Plenty of power is
delivered across different grids using HVDC.

------
Roritharr
Without reading this somewhere or having anything to back it up: This,
combined with the acquisition of SolarCity, looks like a move to get Tesla
into a different Asset Category to make it even cheaper to loan money. If they
can be seen in the same risk/asset-category as a power utility, they can rely
even more heavily on loans.

Does anyone know if that would be a viable strategy?

~~~
wbc
unless they're having trouble getting funding w/o loans, this shouldn't
matter:

[http://www.investopedia.com/terms/m/modigliani-
millertheorem...](http://www.investopedia.com/terms/m/modigliani-
millertheorem.asp)

TLDR: market value is based on earnings power and independent on cost of
capital. i don't think the risk of underlying assets change much in this case

------
JoeAltmaier
OP seems confused, claims these battery packs will 'replace fossil fuels'.
Under some misconception that the batteries get charged for free or something.

~~~
jonah
Solar and Wind aren't fossil fuels. That said, we need a whole heck of a lot
more of them to replace fossil fuels. But, as other commenters have stated, if
you can charge these batteries during the day and use the power at night, then
yes, you can replace the 24 hour nature of gas/coal.

------
jgalt212
More corporate welfare for the Corporate Welfare Queen.

~~~
mikeyouse
> More corporate welfare for the Corporate Welfare Queen.

Southern California Edison is a subsidiary of a publicly traded energy
company.. Where exactly is the subsidy here?

------
charlesetc
Why do you all rely on oil? Just use batteries...

\s

I think it's important to note that they are not "replacing fossil-fuel
electricity generation with lithium-ion batteries".

They are putting fossil-fuel supplied electricity into batteries to use at a
later date.

~~~
pyoung
The biggest need for storage is to offset the intermittency of solar and wind,
and to help shift peak solar generation (typically 12-2pm) to match peak
demand (typically 4-8pm). Reliable and affordable storage is a prerequisite to
wide scale solar and wind generation.

[http://www.greentechmedia.com/articles/read/californias-
duck...](http://www.greentechmedia.com/articles/read/californias-duck-curve-
will-encourage-innovation)

~~~
semi-extrinsic
Sure you want to smooth out intermittencies, but this plant is way too tiny to
actually store energy when it's windy and releasing it when it's not. It's
more likely to handle peaking on a minute-by-minute basis.

Considering that a single big wind turbine produces 8 MW, this 80 MWh storage
facility can only store 5 hours of production from two wind turbines!

And one of those turbines only costs about half of the Tesla storage facility.

------
klakier
What a bullshit. I'd call this Russian way of doing business, where you
benefit from unhealthy connections with state. 2500 houses? Go find out how
many houses are there in California.

~~~
XJOKOLAT
This point has been addressed several times in this discussion. It's not about
the number of houses. Thanks.

