How Tesla’s Commercial Batteries Have Changed The Future…For Winemakers?

Tesla won’t deliver batteries until late this summer, but Jackson Family Wines is already using them to slash its peak-demand energy use.

The vast majority of the 49 lush acres at La Crema winery in Windsor, California is covered in uncountable rows of beautiful green Pinot Noir and Chardonnay grapevines. But nestled into a small industrial area near the side of one of its fermentation buildings, near the new vending-machine-sized boiler and a whole lot of piping, is a set of what might look to the untrained eye like some sort of electrical transformer.


In fact, these tall, wide, white boxes are three banks of Tesla’s new industrial batteries. You’d only know if someone told you (or if you went around the back and found a small sticker with Tesla’s logo and some technical information). But unlike the ones in the renderings unveiled in late April by Elon Musk, the CEO of both Tesla Motors and SpaceX (and the chairman of Solar City, the largest provider of solar power in the United States), these are the real thing, part of a pilot project to see how the batteries–freed from the confines of the Tesla automobile–can help businesses with heavy energy needs.

Like, say, a winery.

Tesla BatteriesPhoto: courtesy of Jackson Family Wines

Winery operators can’t afford to take constant power generation for granted. Lighting, air-handling systems, and refrigeration are all critical to the winemaking process. So last year, when a large earthquake and a small plane crash within a month of each other knocked out power at wineries he manages, Mitch Davis knew something had to be done.


Davis works for Jackson Family Wines, which has 40 wineries around the world, including its most well-known brand, Kendall-Jackson. In 2012, Jackson Family Wines (JFW) initiated an ambitious green-energy effort with a single rooftop solar-thermal co-generation system. The company now has 6.5 megawatts of solar panels installed across eight wineries, all of which will be operational by the end of summer. That’s the equivalent of the electricity it would take to power 1,300 homes, and is, claims Julien Gervreau, JFW’s senior sustainability manager, the largest solar commitment in the winemaking industry.

Even with all that, the company had little protection against the potential damage to its business from freak events like the two that took place last year.

“You don’t build a plane crash and earthquake into risk management,” Davis said, “but they happen.”


Enter Tesla

Known by most for its sexy electric cars, Tesla is in many ways a battery company first. The cars were really just its original marketable (if pricey) consumer packaging for those batteries. Now, the batteries, albeit larger versions than would ever fit in a vehicle, are coming to the forefront.

At the heart of Tesla’s announcement in April was the PowerWall, a (somewhat) affordable system for homeowners providing either 10 kWh power storage optimized for when the grid goes down for $3,500, or 7 kWh power storage optimized for extending the benefits of solar into evening hours for $3,000. Both models can be strung together for increased storage capacity.

Demand for the batteries was instant, and impressive. It won’t start delivering product until late this summer, but Tesla has already said it’s sold out until next year.


That night in Hawthorne, Musk also talked about Tesla’s PowerPack line, a system of 100 kWh batteries aimed at utilities and meant to be scaled up to banks of between 500 kWh and 10 mWh. Unlike the sleek, wall-mounted PowerWall, the PowerPacks have a more blunt, industrial look.

PowerPacks renderingPhoto: Courtesy of Tesla

In a publicity photo pegged to the April announcement, Tesla showed a rendering of a large PowerPack installation: Countless banks of tall, featureless bricks, each seemingly as big as the company’s sedans (one of which is seen in the background kicking up dust on an adjacent idyllic country road).

Tesla briefly highlighted some of the companies chosen to be part of the pilot program, which included (in addition to JFW’s La Crema winery) Amazon Web Services, Target, and the energy intelligence software developer EnerNOC. Tesla didn’t say exactly how each company was chosen, but did stress their desire to put their batteries to the test in a wide variety of industries.


While Tesla’s commercial PowerPacks will have a 100 kW capacity, the prototypes are double that. That means La Crema has 600 kW of production, or 1.2 MWh of energy storage capacity across these three banks of batteries. All told, the company has 21 of the batteries across six of its wineries, which were installed from late last summer to early this year. By February, they accounted for 4.2 mW of production, or 8.4 mWh of total energy storage capacity.

Tesla began the pilot program in 2012, and over the years, the “pedigree” of the batteries it has installed at participating companies in the data center, commercial retail, heavy manufacturing, education, and winemaking industries (among others), has changed. Tesla also wanted to see how the batteries would fit into the businesses of those taking part in the pilot, given the vagaries of software, energy rates, and business needs across different industries.

“The intent of these early-stage projects,” a Tesla spokesperson told Fast Company, “was to prove out the technology in a wide variety of use cases and technology leading up to the [April] product launch….The learning was around creating the software control within the systems to work with different utilities and rate structures and demand curves.”


The deal, according to Gervreau, was simple: JFW paid nothing for the batteries, and in return, they split the resulting savings with Tesla. The system has slashed JFW’s energy costs by 20%, meaning it and Tesla are both pocketing 10% savings totaling hundreds of thousands of dollars a year, he said.

“From our perspective, it was as close to a no-brainer as you could get,” Gervreau said. “The pilot test was a fundamentally disruptive technology at no out-of-pocket cost….This puts us at the forefront of the conversation of how energy is used and billed, and that’s an exciting place to be.”

The Catch

There’s one unfortunate catch to JFW’s use of the batteries, thanks to energy rates established by the California Public Utilities Commission (CPUC). The batteries could easily be used–at least from a technology standpoint–to store electricity produced by JFW’s solar panels during the day and then power the operations during dark hours. That would certainly be the best way to go from a greenhouse-emissions standpoint, Gervreau admits. But California’s current energy rates don’t allow it.


Gervreau explained that under the rates set by the CPUC and energy giants like PG&E and Southern California Edison, industrial installations like JFW’s are incentivized to utilize the solar power stored in Tesla’s batteries only during peak-demand hours, which is during the heart of the day. He said this system, called “peak shaving,” “provides [us] the maximum economic value.”

That’s true, and a known issue tied to electricity rates set “before there was a huge amount of solar on the grid,” said Chris Edgette, the senior director at the California Energy Storage Alliance.

Energy is billed by how many kWh (kilowatt hours–a unit of energy equivalent to one kilowatt of power expended for one hour) are used during demand periods, plus a monthly demand charge, Gervreau said. The batteries are used to shave JFW’s peak demand usage by about 20%. So, for example, if the company’s peak demand was typically 500 kW during a billing period, it ends up paying for about 400 kW thanks to the batteries.


But that also means a company like JFW is not getting maximum usage from its solar panels and batteries. Instead, the batteries are charged from the grid at night, when electricity is cheaper. Then, the batteries sit idle until peak demand hours, when they kick in, helping JFW cut its demand for grid power.

Edgette noted that the highest current rates and demand charges occur between noon and 6 p.m. for commercial facilities like JFW’s wineries. But because so much solar is coming online these days, those time frames are shifting to the evening, when solar production wanes.

“The rates need to change to the new evening peak,” Edgette said. “The rates are behind the 8-ball.”


He added that change is in the works in California, and that new rate structures could be in place as soon as next year that should better leverage the connection of solar to batteries.

That would be a good thing for companies like JFW.

Grapes and SolarPhoto: Daniel Terdiman

“These allow you to be a lot more within your own realm, and be within your own power resources,” Gervreau said of the combination of JFW’s solar arrays and its Tesla batteries. “When you connect solar and batteries, there’s a huge opportunity for a self-sustaining system.”


Both Gervreau and Davis said the winemaking industry is collaborative, in the sense that wineries often help each other out and share techniques or technology. After all, Davis said, people frequently change jobs in the industry a lot, and it makes sense to have a lot of friends. His winemaking counterparts at other companies are naturally curious about JFW’s Tesla batteries.

On the other hand, even within this “brotherhood,” there’s always a little one-upsmanship going on.

“There’s definitely a sense of competitiveness,” said Davis. “It’s like, ‘I’ve got Tesla batteries, what have you got?’”


About the author

Daniel Terdiman is a San Francisco-based technology journalist with nearly 20 years of experience. A veteran of CNET and VentureBeat, Daniel has also written for Wired, The New York Times, Time, and many other publications