By 2020, Tesla CEO Elon Musk believes the factory will produce 35 gigawatts (a gigawatt is one billion watts) of battery capacity, with the objective of driving down the per kilowatt hour (kWh) cost of battery packs by more than 30% through economies of scale.
Tesla is offering residential and commercial Li-ion battery systems.
This week, Tesla released the second part of its "master plan," the first phase of which includes integrating rooftop solar panels "seamlessly" with battery storage.
In fact, without Li-ion battery storage systems, the U.S. power grid could fail, according to a study by Navigant Research last year.
As the number of solar panels on business and home rooftops multiply, America's power grid is bearing an electrical load that it was never designed to handle: bidirectional power transfer.
With bidirectional power transfer, the utility still sends power to the customer, but with solar panels, the customer can then send excess power back to the utility.
"There's no grid system in the world designed for that," said Anise Dehamna, principal research analyst at Navigant Research. "Every grid has been designed for unidirectional flow of energy -- from transmission to distribution to the end user."
The growth of energy storage will be lead by lithium-ion battery technology, which has become the de facto standard.
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