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Tesla Gets 1st Utility-Scale Deal For Its Battery Storage System

Tesla Motors (TSLA) has inked a couple key new deals for its batteries to be used in big power projects, after debuting its Tesla Energy business unit in April and showing off Tesla Powerwall batteries for the home. That sent Tesla stock to a 2015 high.

Ireland-based wind energy and energy-storage company Gaelectric Group said Thursday that it will deploy Tesla Energy's first battery power utility-scale project there next year — a one-megawatt demonstration project — while the companies collaborate to develop a pipeline of battery projects to build new transmission system services that are needed to help integrate renewables such as solar power and wind power with the electric grid.

Storing the energy produced by renewables such as solar and wind can help those sources deliver power to the electric grid in a smoother pattern, so it's not just when the sun is shining and when the wind is blowing. And that can be crucial to the power grid's efficient planning and operation as renewable sources become bigger suppliers.

"We are delighted to be associated with Tesla in introducing its battery systems to Ireland," Gaelectric CEO Brendan McGrath said in the announcement. "As a renewable energy group with a pipeline of 500 MW of wind power in Ireland and energy storage projects in Ireland and Europe, Gaelectric has an obvious incentive to drive the adoption of technologies that facilitate the economic dispatch of wind and other renewable sources.

Gaelectric said that it and Tesla are focused on "exploring the development and demonstration of innovative business models for energy storage within transmission systems" and that Ireland "has many compelling features" for the commercialization of the Tesla Energy product range, "given its scale and ambitious renewable energy targets and favourable regulatory framework.

Gaelectric said that investigation of other European markets will be part of the collaboration.

On Wednesday, Georgia-based public utility Southern Co. (SO), which serves more than 4.5 million customers in the U.S. Southeast, announced at its annual stockholders meeting that it has reached an agreement with Tesla to test commercial-scale battery storage.

Southern has also been testing Tesla vehicles for use in its operations, along with EVs from GM (GM), Ford (NYSE:F) and Nissan (NSANY).

In the utility arena, Tesla already has a pact with Edison International (EIX) units Southern California Edison and SoCore Energy, implementing energy storage projects that feature Tesla Powerpacks. It also has agreements with Advanced Microgrid Solutions, OnCor and AES (AES).

And Tesla had previously named "highlighted Powerwall distribution partners" including Treehouse — billed as a "sustainable home improvement store" — inverter makers Fronius and SolarEdge (SEDG), and Vermont public utility Green Mountain Power.

The lithium-ion batteries that Tesla uses, and will eventually make in its Nevada gigafactory as it works on emerging battery technologies, are not the only way to store energy at utility scale — thermal storage techniques use anything from water to sand.

And there are other technologies. Gaelectric got into storage in 2006, formally setting up its Gaelectric Energy Storage business unit then. Among its projects is a 330-MW compressed-air energy storage tech project in Northern Ireland. The company notes that it has "established positions" in onshore and wind generation in Ireland and the U.S.

Tesla stock rose 1.6% to 251.45 on Thursday, hitting its best intraday level since Nov. 18. Shares are up 13% so far this year.

But after two straight non-GAAP losses, Tesla does not currently get a high Composite Rating from IBD, after a stellar stock run-up in 2013 and strong gains in 2014.

Follow Donna Howell on Twitter: @IBD_DHowell.

RELATED: What Is Tesla Energy And Can It Profit For Elon Musk?

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