Tesla has signed its inaugural agreement to construct a grid-scale battery power plant in China, a report claims. This move comes amidst ongoing trade tensions between the US and China. The Elon Musk-led electric vehicle maker took to the Chinese social media platform Weibo to announce that this project, upon completion, will be the largest of its kind in China. The deal, valued at 4 billion yuan ($556 million), was signed by Tesla, the Shanghai local government and financing firm China Kangfu International Leasing, a report by the news agency Reuters noted, citing Chinese media outlet Yicai. Utility-scale battery energy storage systems are crucial for maintaining balance within electricity grids, especially as intermittent renewable energy sources like solar and wind become more prevalent.

What Tesla said about building the biggest ever battery power plant in China

Tesla announced that its Shanghai battery factory produced over 100 Megapacks in the first quarter of this year. Each Megapack is capable of delivering up to 1 megawatt of power for four hours, making it suitable for utility-scale energy storage.In the Weibo post, Tesla wrote (translated from Chinese): “The grid-side energy storage power station is a ‘smart regulator’ for urban electricity, which can flexibly adjust grid resources.”Tesla added that this would “effectively solve the pressure of urban power supply and ensure the safe, stable and efficient electricity demand of the city.” It also noted that, “after completion, this project is expected to become the largest grid-side energy storage project in China.”The company’s website states that each Megapack is priced at just under $1 million in the US, though pricing details for China have not been disclosed.According to the Reuters report, the deal is a major step for Tesla as it faces competition from Chinese battery giants CATL and BYD, with CATL holding around 40% of the global market. CATL is also expected to supply components for Tesla’s Megapacks.The agreement with a local Chinese authority is especially notable amid ongoing US-China trade tensions and past political ties between Elon Musk and former US President Donald Trump.China’s demand for large-scale battery storage is growing rapidly, with a target to add nearly 5 gigawatts by 2025, the Reuters report adds. Tesla is also exporting Megapacks from its Shanghai plant to Europe and Asia to meet rising global demand. In 2023, global battery energy storage capacity rose by 42 gigawatts, which is almost double the growth seen in the previous year, according to the IEA.