The U.S. Department of Energy has announced that products like the Tesla Megapack will radically alter the country’s energy generation system in the coming years.
The Energy Information Administration (EIA), a part of the U.S. Department of Energy (DOE), has released a report stating that U.S. commercial energy storage is expected to triple in capacity by 2025. And with Tesla being such a prominent supplier in that market, the company has a massive opportunity for growth.
According to the EIA’s report, initially reported by Reuters, the United States currently has 7.8GW of battery energy storage, which will be expanded to just over 30GW by 2025. This is an incredible growth metric in the utility space, which is usually a far more conservative and slow-growing industry. Furthermore, battery energy storage only became a significant energy provider in 2020 following the introduction of the Tesla Megapack.
Battery energy storage is following similar growth in large renewable energy projects, particularly solar and wind. As noted by the EIA, electric utilities are learning that to smooth the supply of energy from these irregular sources, they need to build storage where peak energy can be held for later use. And in turn, the EIA expects the “growth in battery storage [to] change the U.S. electric generating portfolio,” as it allows for older fossil fuel plants to be decommissioned.
Tesla is perfectly positioned to take advantage of this new growth in energy storage demand. The latest Tesla facility built in California is solely dedicated to Megapack production. And as it has continued to ramp, Tesla may be able to produce commercial energy storage systems at a rate unparalleled by competitors.
Tesla has already seen the beginning of this demand boom, with over 17 major projects in the works all over the world. The countries with the most significant demand are the United States, the United Kingdom, Australia, and Canada.
As the demand for Tesla’s energy products continues to grow, both commercially and residentially, Tesla’s Energy division is becoming an ever larger sector of the company. This has been observed in recent Tesla earnings calls where Tesla Energy has continued to grow revenue and massively expand production for Megapacks, Solar, the Solar Roof, and the infamous Powerwall.
The opportunity that Tesla currently faces is unique, and eyes will be on CEO Elon Musk to see if he can deliver. But at the very least, this shows the progress the United States is making toward a more sustainable energy grid.
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