Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Tesla’s CEO Elon Musk has declared that the company’s huge battery factory, under construction outside of Reno, Nevada, will be powered by Tesla’s own clean energy, including solar, wind and geothermal. But how exactly an energy-intense battery factory — the largest in the world — could be solely powered off of Tesla’s own independent energy generation, and still achieve net energy consumption of zero, has remained an important question.
But one answer is that Tesla’s goal to “produce all of the energy that it needs” and be “self-contained,” as Musk describes it, is a long-term goal. It appears that in the short term, the factory will likely be using grid power for a significant power source for starters, which shouldn’t be a surprise to anyone that’s been quietly crunching the energy numbers.
Two weeks ago the Nevada legislature convened a special legislative session to approve the final negotiations with Tesla on the plan. Four bills were signed into law on September 11th as part of the deal, and one in particular — Assembly Bill 1 — suggests that Tesla plans to use grid power for part of the factory in the near term.
Assembly Bill 1 (text here), which is now law, extends the state’s Electric Rate Rider Program, which has been offering discounts on electricity rates to companies in the state that are eligible. The new bill would enable Tesla to get $8 million in electricity rate discounts, and Tesla would have to sign a contract to buy grid power from NV Energy for 10 years to be eligible for the program, according to the Reno Gazette Journal, which attended the legislature sessions. So that could mean 10 years of grid power for the Tesla factory set at the agreed upon discount rate.
Paul Thomsen, the Director of the Nevada Office of Energy, explained to me in an interview that building out the clean energy portfolio that Tesla wants for its factory will no doubt take time, and in the mean time the company will be taking power from the grid. Tesla could be using 50 MW of energy in the ramp-up stage of its factory, and a total of 300 MW for the entire finished facility, noted Thomsen.
Three hundred megawatts of clean energy is a whole lot of solar panels, geothermal wells and wind turbines. It will be interesting to see how much Tesla will rely on the grid in the longer term, and at what point Tesla will build out its own assets (if it ever does). Other companies like Apple, which are making aggressive commitments to large amounts of clean energy, are heavily dependent on the grid.
NV Energy has its own clean power development program, as well as significant clean power under contract, so Tesla will likely be buying clean power from NV Energy in some respect via the grid. The Reno Gazette Journal quoted lobbyist Tony Sanchez, who says NV Energy is already actively negotiating with Tesla to build some of its renewable energy infrastructure.
There’s nothing wrong with grid power if Tesla is using clean energy, but in the long term Tesla execs and Musk have said they have the desire and plan to go off-grid to some extent. And Tesla is in an interesting position to do that because its own batteries could be used for energy storage, paired with the clean energy. Tesla sister company SolarCity, which develops solar projects and will soon make solar panels, could also be an important partner in this regard.