(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 essential as power companies turn to wind and solar power to replace power 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 produce.
China has also liberalized its power 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.
Electricity becomes cheap when the sun is shining or the wind is blowing hard, generating so much renewable energy that factories and homes are unable to use all of it immediately.
Variable electricity pricing aims to encourage electricity users to turn off power-hungry appliances when demand is high, thereby reducing the risk of blackouts. The combination of China’s pricing change and regulations for storing electricity in new renewable energy generation facilities has created a rapidly growing demand for batteries.
Incentives
Tesla is also active in the field of renewable energies: it is a major manufacturer of solar panels in the United States.
Large batteries allow electricity producers, electricity consumers and even speculators to buy electricity when it is cheap and sell it when the price rises.
“It’s this gap that determines whether storage is profitable or not,” said David Fishman, senior manager at Lantau Group, an energy consultancy in Hong Kong.
Mr Musk said in a tweet that the aim of the new factory was to “complement production from the Megapack factory in California”.
The Biden administration, along with the Chinese government, is pressuring companies to invest heavily in emerging technologies.
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.
China, a major battery producer
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 factory in Shanghai 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.
This article was originally published in The New York Times.