Tesla Energy (TSLA) won a multi-billion dollar deal for supplying its large Megapack batteries to Intersect Power. This battery supply contract spans several years well through 2030.
Tesla will provide Intersect Power with 15.3 GWh of Megapacks for the next 6-7 years. These Tesla Megapacks will be used to commission large-scale solar + battery energy storage systems (BESS) in California and Texas.
Intersect Power announced the Megapack deal with Tesla in a press release on Thursday (18th July). The Californian IPP wrote:
Tesla and Intersect Power today announced a contract for 15.3 GWh of Megapacks, Tesla’s battery energy storage system, for Intersect Power’s solar + storage project portfolio through 2030. This agreement, when combined with previous commitments, makes Intersect Power one of the largest buyers and operators of Megapacks globally with nearly 10 GWh of large-scale energy storage expected to be deployed by the end of 2027.
Tesla has already supplied Megapacks to Intersect Power for the company’s completed or under-construction projects totaling an energy storage capacity of 2.4 GWh. The new mega deal with the buyer sets Tesla Energy as the top battery supplier for energy storage systems in the United States.
“No one in the market can match Tesla’s depth of experience in storage technology,” said Sheldon Kimber, CEO of Intersect Power. “This partnership is the foundation of one of the largest and fastest-growing storage portfolios in the country here at Intersect Power. This storage franchise is the perfect complement to our multi-billion dollar expansion of renewable generation that is expected to more than triple the size of our company over the next three years,” he added.
With the growing demand for large-scale battery packs, Tesla purchased land in Lathrop, California in 2021 to set up a Megapack production factory. At this time, Tesla was already supplying Megapacks to PG & E for the world’s largest lithium-ion battery energy storage project in California.
Tesla’s Lathrop Megapack factory is the company’s first dedicated large-scale battery energy storage manufacturing plant. Tesla named these facilities Megafactories. The 2nd Megafactory is currently under construction in Shanghai, China. When complete, both Megafactories in Lathrop and Shanghai will have a yearly 40 GWh battery production capacity each.
Tesla is quickly ramping up Megapack production at the Lathrop, California Megafactory. According to various reports, Tesla Energy’s battery storage deployment more than doubled in Q2 2024 compared to the previous quarter. Tesla deployed 9.4 GWh of battery storage in Q2 (more on Q2 2024 Earnings Call on Tuesday 23rd July).
In a recent Megafactory Lathrop drone flyover footage, a large number of Megapacks can be seen placed outside the factory — ready to be shipped to BESS sites across the United States.
Tesla Revenue from the Intersect Power Megapack Deal (estimated)
The news of Tesla signing a 15.3 GWh battery storage contract sparked my curiosity to know the estimated cost of the deal.
Upon searching the internet, I found out that the average cost of 1 MWh of lithium-ion battery pack is around $450,000. To know the cost of 1 GWh, we multiply it by 1,000. So, 1 GWh battery storage costs around 450 million dollars.
Now to know the cost of the entire deal, we multiply 450 million dollars by 15.3. So, Tesla’s Intersect Power deal of 15.3 GWh is roughly worth around 7 billion dollars in revenue over 6 years. This is based on the current prices of batteries. As this is a multi-year battery storage deployment project, the cost of batteries might change resulting in a different revenue figure for Tesla at the end.
Due to the rapid growth in Tesla’s battery energy storage system (BESS) deployment, Tesla investor Morgan Stanley raised its TSLA price target by $50 to $310 recently.
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