Tesla [TSLA:US] plans to build a new battery plant in Shanghai’s Lin-gang Free Trade Zone (FTZ), where the company’s massive electric car factory is also located, as reported by Caixin on April 9. The new factory will produce Megapack, a grid-scale energy storage product. The construction is scheduled to begin in 3Q23 and the plant is expected to be operational in 2Q24, initially producing 10,000 Megapacks every year, which is equivalent to around 40 gigawatt-hours (GWh) of energy storage. The Shanghai factory will supplement Tesla’s existing Megafactory in California, which can produce 10,000 Megapacks per year.
Megapack batteries are designed to store energy that can be used during times of surplus demand, making them crucial in tapping intermittent and unsteady renewable energy. Megapacks can help stabilize power grids, with every unit capable of powering an average of 3,600 homes for one hour. Tesla eyes China’s growing demand for energy storage and its leading battery supply chain. In 2022, China added 194 new electrochemical energy storage power stations, increasing the total storage capacity to 14.5 GWh from 6.19 GWh in 2021. Furthermore, China has more than 1,400 GW of battery manufacturing capacity, with an additional 6,000 GW under construction or announced. Tesla estimates that the world will need to install around 46,200 GWh of stationary battery storage within the next two decades, with renewable energy paired with energy storage playing a crucial role in decarbonizing electricity and greening the industrial sector.