Tesla announced Thursday that it will build a battery storage system at a California utility substation that will have the largest output of any existing lithium-ion storage facility.
Southern California Edison selected Tesla to construct the storage project in Riverside County, the company said in a statement.
The facility will store 80 megawatt hours of electricity, or enough to power more than 2,500 households for a day, Tesla said.
The system is designed to increase electrical grid reliability by taking a charge from it during off-peak hours and delivering power to customers during peak hours, the Los Angeles Times reported. It is expected to go online by the end of this year.
Edison and other California utilities are under a 2013 order by California's Public Utilities Commission to install 1.3 gigawatts of storage capacity by 2020. One gigawatt is the equivalent of 1,000 megawatts.
Southern California Edison is ahead of schedule to meet its 2016 storage targets, said utility spokesman Paul Griffo.
The high cost of energy storage has been a factor limiting wider use of the technology. Tesla and Southern California Edison did not disclose the cost of the battery storage system.
"Much like renewable resources, we expect to see a declining cost curve in energy storage over time," Griffo said.
Projects already are under development that will have five times the output of Tesla's, the newspaper said.