(Beijing) Elon Musk, CEO of Tesla, announced on Twitter on Sunday that his company will build a factory in Shanghai with the aim of assembling 10,000 giant batteries a year for electricity producers and distributors.
The batteries, which Tesla calls Megapacks, are designed to store large amounts of electricity – a single Megapack can power 3,600 homes for an hour, according to Tesla. The batteries, which are roughly the length and height of a shipping container, can offload electricity to power factories or homes when demand from the local power grid is high, or during a power outage. fluent.
The ability to store electricity when it is not needed is critical as power companies turn to wind and solar power to replace energy generated by fossil fuels. In China, the demand for grid storage batteries is particularly strong. Many provinces now require new solar and wind farms to have enough batteries to store 10-20% of the electricity they generate.
China also liberalized its electricity markets in response to waves of blackouts in the fall of 2021, when demand overwhelmed the country’s power providers. Many factories were shut down for days and some office towers had to be evacuated before their elevators ran out of power. Part of a chemical plant exploded, injuring dozens of workers, when it suddenly lost the electricity needed to maintain the mix of temperature, pressure and other variables needed for its processes.
China responded by allowing electricity prices to vary more throughout the day, hoping to encourage more evenly distributed energy use.
Variable electricity pricing aims to encourage electricity users to switch off power-hungry appliances when demand is high, thereby reducing the risk of blackouts. The combination of China’s pricing change and regulations around electricity storage in new renewable energy generation facilities has created a rapidly growing demand for batteries.
Tesla is also active in the field of renewable energy: it is a large manufacturer of solar panels in the United States.
Large batteries allow power producers, power consumers, and even speculators to buy power when it’s cheap and sell it when the price goes up.
“It’s this gap that determines whether storage is profitable or not,” said David Fishman, senior manager at Lantau Group, an energy consultancy firm in Hong Kong.
Mr. Musk said in a tweet that the goal of the new plant was to “complement production from the Megapack plant in California.”
The $370 billion Cut Inflation Act that President Joe Biden signed into law last year provides incentives for the production of rechargeable batteries in the United States to supply the American market.
The Shanghai municipal government declined to comment immediately on Tesla’s announcement.
For Tesla, Shanghai is the site of its largest electric car manufacturing plant. The plant not only supplies the Chinese domestic market, but also exports a large number of vehicles to Europe, where Tesla has found it more difficult to build factories as quickly as in Shanghai.
China produces the most rechargeable batteries in the world and dominates the chemical processing needed to produce their ingredients. The Tesla Shanghai factory that will manufacture the Megapacks will be close to the factories that produce almost all of the lithium-iron-phosphate compounds for batteries.
These compounds are less expensive to manufacture than materials previously used in rechargeable batteries, including cobalt. Human rights activists have raised alarm over working conditions in Africa’s cobalt mines, the world’s biggest source of the mineral.
