Tesla’s energy storage business, more than a decade old, belongs to the elder statesman. Growth in sales of its Powerwall (battery storage for homes) and Megapack (battery storage for utilities and commercial facilities) in recent years has helped offset the decline in EV sales, although last quarter saw a sudden drop in energy revenues. Still, Tesla is moving forward with its plans to open a new, larger Houston facility dedicated to the Megapack later this year.
A total of 11 battery cell manufacturing plants are being repurposed for energy storage, according to BloombergNEF’s March count, eight of which are in the US.
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One reason investors are so excited about battery energy storage is their continued enthusiasm for AI. AI companies need data centers, and data centers need energy. Batteries are a great fit for data centers, says Shan Tomock, who leads battery energy storage research at Benchmark Mineral Intelligence, a research firm focused on battery supply chains. Batteries can help directly power energy-hungry hubs that constantly run servers and other hardware, but also the cooling systems that keep them functioning.
Storage systems may also be suitable for data centers that rely heavily on other energy sources, such as natural gas. Battery energy storage systems can serve as a backup power source if something goes awry and can help data centers manage the large and wild power fluctuations associated with AI training. They can help reduce demand on the grid, reducing costs not only for data centers, but also for everyone who relies on the same system – a significant benefit in communities already hostile to technology.
“If the huge market for data centers continues to grow every year, it would make sense for automakers to make changes,” Tomauk says. He hopes that happens. “In the US, there’s a real drive to build data centers to keep the US number one in AI.”
For automakers retreating from EVs, battery storage is another potential advantage, even if the pivot doesn’t work perfectly. “If automakers aren’t making money from storage and aren’t making money from EVs, they’d prefer not to make money from storage because they’re not competing with their own gas car production,” says Gil Tal, director of the EV Research Center at the UC Davis Institute of Transportation Studies. “Unfortunately, it makes perfect sense.”
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