Tesla’s new solar storage system-a game changer for utilities?

Tesla’s new solar storage facility will help utilities like Kauai Island Utility Cooperative to reach its renewables goals.
Published: Fri 17 Mar 2017

Tesla, through SolarCity, has unveiled an impressive solar system and battery storage facility on Hawaii’s Kauai Island and it promises to reduce current electricity prices.  SolarCity is an American company that specializes in solar energy services and is headquartered in San Mateo, California.

The Kapaia project, which took off in February 2016, caught US attention when it was first at the end of 2015 as the first fully dispatchable solar+storage project in the country.

The solution was created in response to grid pressure caused by high levels of renewable integration. Kauai Island Utility Cooperative (KIUC) wanted to overcome integration issues so that it could introduce more solar to the grid without having to curtail solar levels at midday, thereby boosting customer savings and reducing reliance on fossil fuels for electricity.   

The system, consisting of 13MW solar arrays and 52MWh of batteries, generates energy and stores it during the day before distributing it at night. The system generates enough energy to power 4,500 Kauai homes overnight which is a significant number of households since the island’s population was at 67,000 as of the last US census.

With over 55,000 solar cells distributed over 18 ha, the facility is now able to provide solar power to KIUC on demand, around the clock.

Better yet, Tesla and KIUC have signed a 20 year contract which will see electricity delivered at 13.9 cents/kWh which is much cheaper than the average electricity rate at 24 cents/kWh. Hawaii’s electricity rate is the highest in the US.  

Another plus is that the new system will reduce fossil-fuel usage significantly, contributing to Hawaii’s aim to reach 100% renewables by 2045.

Utilities hungry for smart storage solutions

This is the first big project from Tesla and SolarCity since last year’s $2.6 billion acquisition which highlighted Tesla’s growing interest in the energy sector.

More than just a Tesla product launch, the Kapaia project is likely to be expanded in the near future and copied in other locations where solar power makes financial and environmental sense.

Storage solutions like Tesla’s will help many global cities and state governments that have ambitious renewables goals to meet because without a storage facility for renewable sources like solar and wind, getting past a tipping point of around 30% can be challenging.

This is especially true for areas where significant resources have already been committed to building power generation infrastructure.

Smart innovations-exactly what the sector needs

It is areas like these that Tesla is watching closely. South Australia, Australia’s most renewable energy dependent state, for instance has a major energy crisis which Tesla has offered to fix within 100 days by installing a 100MWh battery storage solution.

Tesla’s ambitious offer, made boldly on social media, follows a number of blackouts that have occurred in quick succession over the last few months, caused by higher-than-expected demand, which overloaded major thermal energy generators at a time when wind power generation was surprisingly low.

One blackout left the state crippled for nearly two weeks.

South Australia’s Senator Sarah Hanson-Young has already made contact with Tesla to discuss the proposal and South Australia’s Energy Minister Tom Koutsantonis has also expressed interest.

While it won’t be up to the federal government to approve the plan, the region’s electricity generation is privatised so Tesla’s proposal is in the hands of individual companies.

But Tesla may be too late as the region has already been approached by other companies wanting to help the region resolve its energy crisis. Examples include Zen Energy which has been working on plans for a battery storage of up to 150MW at Port Augusta and Lyon Solar wants to build 200-250MW of large-scale batteries in several projects around the state.

Some companies propose that these projects will be ready in time for next summer, when electricity shortfalls have been predicted across South Australia and Victoria.

But what if Tesla can do it in 100 days?

The company has already proved that it is possible. Tesla built a massive 80MWh battery farm in California in just 90 days.

If anything, Tesla’s proposal is causing waves but probably creating some much needed disruption in a sector that is moving perhaps a bit too slow.

Tesla’s proposal could be a real game changer for the industry as innovators scramble to find the missing piece in a very complex and competitive sector. Perhaps Tesla’s sweeping social media comments is exactly what the sector needs.