Tesla batteries to power office buildings in California

October 12, 2015

By Katie Fehrenbacher:

Tesla’s bat­ter­ies aren’t just for cars any­more. They’ll be used in bat­tery farms at build­ings around California.

A big real estate devel­op­er and a well-con­nect­ed tech start­up have a plan to install bat­ter­ies from elec­tric car com­pa­ny Tes­la at office build­ings in a Los Ange­les suburb.

On Mon­day, devel­op­er The Irvine Com­pa­ny and start­up Advanced Micro­grid Solu­tions announced that they plan to build large bat­tery farms —each the size of about five park­ing spaces—at build­ings in Irvine, Calif.

The startup’s soft­ware can switch the build­ings to bat­tery pow­er when elec­tric­i­ty demand on the pow­er grid is high like dur­ing hot sum­mer after­noons when air con­di­tion­ers are blast­ing. This relieves some of the stress on the pow­er grid dur­ing peak times.

The deal is part of Advanced Micro­grid Solution’s work with the local util­i­ty South­ern Cal­i­for­nia Edi­son to pro­vide it with the equiv­a­lent of 50 megawatts of bat­tery sys­tems. As part of that, Advanced Micro­grid Solu­tions plans to install about 10 megawatts of bat­ter­ies in Irvine in 2016. Ten megawatts is enough ener­gy to pow­er about 10,000 homes.

For com­par­i­son sake, GTM Research esti­mates that about 220 megawatts worth of bat­ter­ies will be installed across the U.S. this year. South­ern Cal­i­for­nia Edi­son has a plan to install 250 megawatts in its home state over the next few years.

Util­i­ties can use bat­ter­ies to make the grid more sta­ble, and to avoid build­ing new expen­sive and dirty pow­er plants that they only oper­ate dur­ing times of peak pow­er demand. Cal­i­for­nia has also required util­i­ties to col­lec­tive­ly install over a gigawatt of ener­gy stor­age by 2020. A gigawatt of ener­gy is about the equiv­a­lent of a large nuclear or nat­ur­al gas plant.

Build­ing own­ers are also inter­est­ed in buy­ing bat­ter­ies so that they can run build­ings off of bat­tery pow­er when elec­tric­i­ty rates from the pow­er grid are high. Build­ing own­ers can low­er their month­ly ener­gy bills by switch­ing onto bat­tery pow­er periodically.

For the first part of the deal, Advanced Micro­grid Solu­tions will install Tes­la bat­ter­ies at 24 build­ings man­aged by the Irvine Com­pa­ny. Those bat­ter­ies can low­er peak elec­tric­i­ty demand on the pow­er grid by 25%, the com­pa­nies said.

In May, Tes­la TSLA -2.32% cre­at­ed a new ener­gy divi­sion that sells the same lithi­um-ion bat­ter­ies it uses in its cars to util­i­ties, bat­tery project devel­op­ers, and home own­ers. Util­i­ties and build­ing own­ers will most­ly use what Tes­la is call­ing its Pow­er­pack bat­ter­ies, while the small­er home bat­tery sys­tems will rely on what Tes­la calls its Pow­er­wall batteries.

Advanced Micro­grid Solu­tions is a three-year-old start­up led by co-founders Susan Kennedy and Jack­a­lyne Pfan­nen­stiel, each of whom have long his­to­ries in the ener­gy indus­try. Kennedy is the for­mer chief of staff to Cal­i­for­nia Gov­er­nors Arnold Schwarzeneg­ger and Gray Davis, and is for­mer com­mis­sion­er for the Cal­i­for­nia Pub­lic Util­i­ties Com­mis­sion. Pfan­nen­stiel pre­vi­ous­ly chaired the Cal­i­for­nia Ener­gy Com­mis­sion, worked at util­i­ty PG&E for twen­ty years, and was the assis­tant sec­re­tary of the U.S. Navy in charge of ener­gy strategy.

This Sum­mer Advanced Micro­grid Solu­tions announcedthat it had secured a con­tract to buy and install a whop­ping 500 megawatt-hours worth of grid bat­ter­ies from Tes­la. That’s the equiv­a­lent of installing tens of thou­sands of Tesla’s Pow­er­wall bat­ter­ies over the course of the next five years.

Advanced Micro­grid Solu­tions and Tes­la share an investor and advi­sor: DBL Investors’ Man­ag­ing Part­ner Nan­cy Pfund. The start­up has raised around $18 mil­lion in equi­ty from DBL Investors, and for­mer Gov. Arnold Schwarzenegger.

To read the full arti­cle, vis­it For­tune.