Tesla is set to build its biggest energy storage facility in China

Tesla, China Kangfu International Leasing, and the Shanghai Municipal Government signed a cooperation agreement to build an energy storage power station, which will become Tesla’s first grid-side, standalone energy storage station on the Chinese mainland. The plant will be located in Lingang New Area, part of the Shanghai Free Trade Zone, Shanghai, and will require a joint investment of $556.6 million (CNY 4 billion).

According to Yicai, this marks the company’s first major collaboration in China since the launch of its Shanghai Megapack factory earlier this year. Precisely, the facility will use  Tesla Megapack batteries, coming from this factory, which has a capacity of roughly 10,000 packs/year (around  40 GWh capacity).

The power station is expected to be completed by the end of 2025 and will deliver around 300 megawatt-hours (MWh) of electricity storage capacity in its first phase. The plant will be built by Kangfu's subsidiary, Kang'ao Energy Technology, which will connect to the local grid using Tesla’s batteries. 

This agreement will allow the construction of the Grid-Forming Zero-Carbon Energy International Cooperation Demonstration Center Project. To develop this hub, an expected investment of 100 billion yuan is required. 

The role of the storage plant will be to “shave” peaks, regulate frequency in the grid, and participate in the spot trading electricity market. This is particularly relevant as more renewable energy sources are integrated into the grid, generating peaks (in solar energy around midday) and valleys during the day, requiring balancing, using technologies like batteries.

Tesla’s energy storage business has grown significantly in the last years, and in 2024 it reached a peak in storage deployment. The 2024 financial statements show a total deployment of 31.4 gigawatt-hours (GWh), increasing 114% over the capacity installed during 2023.