Switch to build huge data center near Tesla battery factory

The stretch of land that will house Tesla’s new massive battery factory just outside of Reno, Nevada, will become home to another very large customer: what’s being billed as the world’s largest data center to be built by Las Vegas-based data center provider Switch.

Nevada Governor Brian Sandoval announced Thursday during his annual State of the State address that Switch, which has huge SuperNAP data center facilities in Las Vegas, plans to build a 3 million square-foot, $1 billion data center (it’s largest project yet) at the Tahoe Reno Industrial Center. Switch plans to have the first 800,000 square-foot portion of the facility built by early 2016, and eBay will be the anchor tenant.

Switch's SuperNAP data center in Las Vegas

Switch’s SuperNAP data center in Las Vegas

Last year, after months of negotiations, Tesla announced that it had chosen the Tahoe Reno Industrial Center for the location of its battery factory, which will churn out enough lithium ion batteries for 500,000 electric cars by 2020. Tesla’s factory will cost $5 billion and will create 6,500 jobs, and Tesla received a $1.25 billion tax break over 20 years.

Switch is also expected to receive tax incentives for its Reno data center. In addition to the new site, Switch is also expanding its facilities in Vegas.

A recently raised spot of land in the Tahoe-Reno Industrial Center.

A recently raised spot of land in the Tahoe-Reno Industrial Center.

Switch’s SuperNAP Reno will connect to its Vegas facilities via fiber — dubbed the SuperLoop — which will be a 500 mile fiber network between the two regions. Data Center Knowledge said the fiber network will “place 50 million people within 14 milliseconds of data hosted at the SUPERNAPs.”

Switch won’t be the only data center operator in the Reno area. Apple is building out a sizable data center (recently expanded to nine buildings and 345 acres) at the Reno Technology Park about 20 miles east of Reno. One thing that attracted Apple, and likely Switch, to the Center is the region’s capacity to offer clean power for data center providers. Tesla plans to, down the road, fully support its factory with clean power.

The deal is good news for the city of Reno and the surrounding area, which has been trying to remake itself into a high tech manufacturing region and move beyond its image as a gambling backwater (see the Changing face of Reno: Why the world’s biggest little city is attracting Tesla and Apple). However data centers don’t provide the type of full time jobs that a factory does.

Is the solar panel & battery combo ready to change energy markets?

The big idea right now for solar and batteries is this: put solar panels on your roof, a battery in the backyard (or basement), and become utterly independent from the power grid, using free electricity from the sun. Batteries have long been looked to as a way to store energy solar energy during the day to be used at night, but they have long been too expensive to be used widely. But many companies are looking at 2015 as a very important year for the solar and battery partnership and I’ve heard the word “tipping point” being used repeatedly about this intersection recently.

Why all the excitement and why now? First off, traditional lithium-ion batteries — the kind being widely used in cell phones and laptops — are becoming cheaper than ever before. Electric car company Tesla and Japanese battery giant Panasonic have been working closely on lowering costs of their lithium-ion batteries significantly, and with Tesla’s “gigafactory” the companies expect to be able to reduce the lithium-ion battery cost by another third.

solar panel

Navigant Research estimates that Tesla pays about $200 per kWh for its Panasonic battery cells today, and that price could drop as low as $130 per kWh by 2020 when Tesla’s massive factory — which is expected to more than double the world’s lithium-ion battery production — is fully up and running in Nevada. Several years ago, lithium-ion batteries cost closer to $1,000 per kWh. Tesla plans to sell some of the batteries from its factory into the power grid market, and SolarCity (the installer company chaired by Tesla CEO Elon Musk) already uses Tesla batteries for a solar panel energy storage system.

Lithium ion batteries are becoming such a clear low cost platform for energy storage that other startups beyond Tesla are adopting this idea, too. At CES last week, a startup called Gogoro launched an electric scooter and battery swapping infrastructure based around modular lithium ion batteries designed also in conjunction with Panasonic. Owners of the Gogoro scooter will some day be able to swap out their two depleted batteries at a nearby battery swap station, and they will likely pay a subscription for access to the batteries.

Gogoro's electric scooter and battery station

Gogoro’s electric scooter and battery station

But it’s not just the economics of lithium ion batteries that are driving the pairing of solar and batteries. Other startups have been developing newer, low-cost battery chemistries that are optimized for the power grid, like Aquion Energy and Ambri. Aquion Energy last week announced that one of its largest battery installations to date (2 MWh) is going into a solar system on the Kona coast of Hawaii.

The surge in solar panel installations is one of the main drivers behind this grid battery trend. There’s a lot bigger market these days for solar: More than a third of all new electricity installed in the U.S. in the first three quarters of 2014 came from solar panels, both utility-scale solar and solar panels on residential rooftops. That’s second only to new natural gas plants.

Battery stacks and modules in Aquion Energy's factory. Image courtesy of Katie Fehrenbacher, Gigaom.

Battery stacks and modules in Aquion Energy’s factory. Image courtesy of Katie Fehrenbacher, Gigaom.

Solar companies, like SunPower, SolarCity, Sunrun and others, are doing deals with battery makers, looking to offer new services. Startup Stem, which uses distributed battery packs to work like virtual power plants, is working with Kyocera Solar.

Then there’s the grid battery market that’s being opened up by the state of California’s aggressive mandates for energy storage. California utilities are being asked to buy 1,325 megawatts of energy storage services by 2020, and utility Southern California Edison has already said it will buy 250 MW of energy storage systems. Part of SCE’s plans will be made up by a huge 100 MW battery plant from AES Energy Storage and a 85 MW contract from Stem.

Tesla's image of its clean powered factory. Courtesy of Tesla.

Tesla’s image of its clean powered factory. Courtesy of Tesla.

So clearly, utilities aren’t worried about energy storage in general, because they will some day be major users of this technology. But in the short term, some are worried about so-called grid defections. If your solar panels and battery offer you all the electricity options you need, why do you need the utility?

However, according to a recent report from Moody’s, batteries and clean power are just still too expensive to be too threatening right now. Moody’s said that even with battery prices at $200 per kWh, and solar panels at $3.50 per watt, these technologies are “an order of magnitude too expensive to substitute for grid power.” Battery prices would have to be closer to $10 per kWh to $30 per kWh range to be cost competitive widely for the power grid, said Moody’s.

Those costs might be difficult for (most) residential customers to justify, but it could be a different story for commercial building owners. GTM Research says the market for solar panels paired with batteries will surpass $1 billion in annual revenue by 2018 (up from just $42 million last year), with collectively 318 MW of solar and storage capacity installed in the U.S. by that time. One in ten new commercial solar customers will opt for an energy storage addition by 2018, predicts GTM Research.

Coming in 2015: A better Tesla Roadster

Tesla’s first electric car, the Roadster, might have been a pioneer back when it was launched in 2008, but it was also a flawed beast and was produced in limited numbers (about 2,500) for a reason. The car was built on a Lotus body and used a third party powertrain from AC Propulsion, and Tesla CEO Elon Musk has said that in hindsight the company should have just built an original car from the ground up, like they did with its second car, the Model S.

But now Tesla is rewarding its early Roadster customers (who were pretty patient with Tesla waiting through many delays) with some of what it’s learned while making the Model S. The day after Christmas, Tesla announced via a blog post that it will be upgrading the Roadsters out there with new batteries that have 30 percent more energy than the older Roadster batteries, new software upgrades to lower the car’s drag coefficient and more efficient tires.

Here Comes the Fluff: Tesla's Roadster 2.5!

Altogether the upgrades will be able to deliver the “Roadster 3.0” a 40 to 50 percent boost to its range over the original Roadster, which was around 200 miles. Tesla said under some very specific driving conditions it can push Roadster 3.0 up to a 400 mile range. Tesla said it will be taking appointments to do the upgrade in the Spring of 2015.

This isn’t the first time that Tesla has upgraded the Roadster. The company launched the Roadster 2.5 in 2010 (two years after the first version of the Roadster), which had some nicer features like a new front fascia, more comfortable seats, a touchscreen navigation system and better air conditioning. Checkout my test drive of the Roadster 2.5 back then.

We’re wondering if Tesla still plans to launch a totally new Roadster design, using a newly designed body, like the company has been reportedly planning to do. Obviously that’s not coming in 2014, like previous reports suggested. Tesla has a lot on its plate getting the delayed Model X out there door, and working hard designing the Model 3, its lower cost, third car.

Tesla stops production for close to 2 weeks to ready for Model X

Tesla robots, courtesy of Tesla.

Tesla factory robots, courtesy of Tesla.


Electric car maker Tesla Motors (s TSLA) has temporarily idled production at its factory in Fremont, California, reports the San Jose Mercury News. It will use the almost two week downtime to increase production of its Model S sedan car, and to make way for manufacturing of its upcoming Model X, crossover SUV, minivan. Tesla plans to deliver 35,000 Model S cars this year, with a goal of 1,000 per week and the first Model X cars will  be delivered in early 2015. Production will resume on August 4.