A decades-old company in Vermont called Dynapower will be supplying equipment for Tesla’s new battery system for utilities and businesses, the companies announced on Tuesday. In April Tesla announced that it would move beyond building electric cars and would start selling its batteries to be used to manage energy on the power grid.
Dynapower will provide inverters for Tesla’s Powerpack battery system. Inverters are electronic devices that convert direct current from batteries and solar panels into alternating current that can be used by a building or put back into the power grid. Dynapower customized its battery inverters for Tesla’s Powerpack battery design.
Dynapower’s 250 kilowatt inverter will enable Tesla’s battery banks to deliver battery energy to its customers, like a utility or a commercial business, in blocks of two, three or four hours. Customers can use this sustained battery energy to avoid using grid energy when electricity rates are high, or to make up for lost energy from solar panels when clouds block the sun.
The deal isn’t exclusive and Tesla is using gear from other electronics companies as well. For Tesla’s Powerwall battery, which is a smaller battery system for homes and small businesses, Tesla is offering an inverter from an Austrian company called Fronius, as well as a solar inverter from a company called SolarEdge.
Becoming a partner to Tesla is a big deal in terms of both sales and attention. While Tesla’s grid battery business is new, the company says there has been a large amount of demand in just the few months since it was first announced.
Tesla expects 80% of its grid battery sales will be from the Powerpack to utilities and businesses. The Powerwall home battery will be a much smaller market.
Dynapower, based in South Burlington, Vermont, says it’s already sold 200 megawatts worth of battery inverters to its customers over its lifetime. The company even has a battery and inverter system operating in Antarctica. For comparison’s sake, two hundred megawatts of Tesla batteries is the equivalent of tens of thousands of Tesla Powerwalls.
The market for energy storage for utilities and businesses is relatively new but is predicted to grow quickly in regions like California, Germany, Australia and Japan. There were just 62 megawatts worth of energy storage installed in the U.S. in 2014, and that number is set to grow to 220 megawatts this year, and 848 megawatts by 2020, according to GTM Research.
There are different types of technologies used to store energy, but batteries are the most common. Lithium-ion batteries, like those used by Tesla, are starting to become the dominant battery form used for grid energy storage.
In its home state of Vermont, Dynapower worked on a novel project with the local utility Green Mountain Power. The companies built a microgrid combined with solar panels and batteries in the city of Rutland, which can provide emergency backup power for residents in the event of a major storm. That project is supposed to be switched on later this month.
Updated: The market stats for energy storage from GTM Research were updated. The previous stats used were for energy storage paired with solar.