New Zealand energy retailer and generator Contact Energy said on Monday that it contracted EV giant Tesla Inc (NASDAQ:TSLA) to build a grid-scale 100-megawatt battery in Auckland for NZ$163 million($99.4 million.)

What Happened: The new battery storage system in Glenbrook will store excess renewable electricity when demand is low and will provide enough electricity to power 44,000 homes for more than two hours during winter when demand is high, Contact Energy said. The company also has the option to expand the battery capacity to 130MW at the site.

The company will start work at the Glenbrook site immediately with the battery expected to be commercially operational by March 2026, it added. While the New Zealand company will manage the overall project, Tesla will be responsible for the supply and commissioning of the battery in addition to long-term maintenance.

"The battery will supply power to the grid in an instant, quickly getting electricity to where it is most needed in the country. It will also support the development of new renewables like wind and solar generation," Contact CEO Mike Fuge said.

"Contact has made a commitment for its generation to be net zero by 2035, and further reduce New Zealand's remaining reliance on fossil fuel electricity generation."

Why It Matters: In 2023, Tesla's energy segment accrued revenues of $6,035 million, up 54% from 2022.

In January, the company expressed expectations for the growth rate of deployment and revenue in the energy storage business in 2024 to surpass that of the automotive sector. Deployments will be volatile and impacted by logistics and global distribution of products, said the company, while adding that it still expects continued growth on a twelve-month basis.

For the first quarter, Tesla disclosed that it deployed 4,053 MWh of energy storage products, representing its highest quarterly deployment to date and a year-on-year increase of 4.2%.

In April, Musk said that the demand for its stationary energy storage products is "super high" and hinted that the company might make more batteries for energy storage than cars in the long term.

"I think Tesla might end up doing more total Joules in stationary than mobile long-term," Musk said.

Earlier this month, during Tesla's annual shareholder meeting, Musk also said that the company is on track to complete a "massive number of energy deployments."

"We seem to be tracking to sort of a 200- to 300-percent year-over-year growth in energy storage deployment and stationary pack. So it's giant. And the limiting factor really is being able to build more Megapacks and build more Powerwalls," he said.

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Photo courtesy: Tesla