Published on September 18th, 2016 | by Guest Contributor0
Tesla Gigafactory 1 — Will It Succeed Or Fail?
September 18th, 2016 by Guest Contributor
By Stephen J. Veneruso
With a name like “Gigafactory,” it should come as no surprise that the press has focused on the eye-popping scale of Tesla Energy’s entry into the energy storage market. But will it work?
As a technologist who has spent decades designing, implementing, and managing 8- and 9-digit information technology (IT) projects at continental and global scales, I freely admit to being captivated by the grandness of Tesla’s latest endeavor (at 10 digits, $5 billion, it’s an order of magnitude larger).
I was delighted to attend the Gigafactory Grand Opening in July. The Gigafactory reminded me of several excellent semiconductor fabs and high-end data centers I’ve had the pleasure of working in: clean, well-lit places, thoughtfully and efficiently laid out, filled with the latest technology and robotics.
However, as I reflected on the Gigafactory Grand Opening, there was this immutable fact I just couldn’t shake:
The larger the project, the more likely it is to fail.
And large it is. Gigafactory 1, when complete, will be one of the largest buildings on earth at 6 million square feet. Even now, only 14% complete, it would rank #6 worldwide if it were a data center.
Will this gargantuan project fail or succeed?
The answer will have dramatic consequences for the energy and transportation sectors, as the goal is nothing short of transformative. If successful, the Gigafactory will change the way we produce, store, and use energy by enabling variable renewables, wind, and solar PV as well as the large-scale electrification of transportation.
If successful, externalities of this transformation will be much cleaner air and water, as coal and liquid fuel use is displaced, and a reduction in CO2 emissions.
If the project fails, it could easily set back the transition to renewables and electric vehicles by years.
What could possibly go wrong?
The specifics of disasters and fiascos I’ve witnessed run the gamut from a burst 10,000 gallon magenta ink tank flooding a production data center (unmaintained/inspected equipment), poorly grounded data center power, poor test plans leading to nationwide outages, emergency generators located in a basement in a floodplain, a sewage main run along the ceiling of a data center, and technical specifications that were cut and pasted from an unrelated contract (that last one seems trivial but it induced a front-page fiasco).
Fun fact: A disaster is a problem so big that your company president or agency head requires regular briefings. A fiasco is when the briefings are to the White House.
In nearly all cases I’ve witnessed or read about (e.g., Titanic and Hindenburg), the common element is identified in official reports to the corporate board, Congress, or White House as mismanagement. This bureaucratese unfortunately distills out the true root cause: people who were either just doing their job or only doing it marginally. The root cause was preventable and correctable if folks had been thinking things through holistically, considering externalities and risks before they acted.
All too frequently, the staff involved may as well have been working at the fictional dystopian factory American Panascope, workplace of Tom Hanks in the film Joe Versus the Volcano.
Given the stupendous scale of the Gigafactory, the number of things that can go wrong are legion and only avoidable by thoughtful, coordinated effort by the architects, engineers, technicians, and construction crews on site who are led by managers who stay focused on the end-goal, a successful Gigafactory, rather than the minutiae of ten thousand line project plans.
What makes large projects successful?
The business section of any bookstore is replete with thick tomes touting complex theories about the causes of the author or star executive’s success. Often, they mistake correlation for causation. Credit is given to peculiar habits such as only writing on scrolls, depriving their brains of oxygen while swimming, brainstorming in a gold-tiled room without nails, or drinking 50 cups of coffee each day. These claims are highly unlikely to have been the cause of their brilliance but rather merely coincidental correlations.
In my experience, the causal relationship for success is simple and devoid of neuroticism:
Success is due to people believing in the mission.
When people believe in the value of what they’re working on — whether it’s saving people’s lives, keeping people safe or fed, keeping the lights on, making the world’s best cupcake, or building something fantastic, innovative, or beautiful — they work harder, more conscientiously, and more cooperatively. They’re curious and notice things outside of their specific work tasks. They carefully consider risks and externalities.
People who believe in the mission regularly go above and beyond to ensure its success.
When people don’t have deeply held feelings for the mission, they just do their job. They may do it excellently, but they’re unlikely to notice (much less raise) critical issues outside of their particular job function. Even if they do notice something, they’re likely to dismiss their observation, thinking simply, “that’s odd, I wonder why they’re doing that?” and returning to their assigned task.
What I observed at the Gigafactory
It was a grand gala, complete with giddy-inducing Ludicrous-mode test drives and guided tours of the operational Gigafactory. Our tour guides were the engineers, managers, and senior executives actually leading the Gigafactory project.
Despite the fact that they were at work on a Friday evening, all of the Tesla employees, from those tasked with greeting and checking in guests to those in the factory itself, seemed filled with joy. The mood was, fittingly, electric. They were delighted to share their work with us and jovially answering questions. For a father hoping for an inspirational experience for his engineering-minded teenage son, it was epic (many thanks, guys and gals!)
Upon reflection, it was the joy I observed that compelled me to write this article. The answer to success or failure lies therein.
It is important to note, of course, that this was a tour and not a due diligence inspection. But if what we saw and heard, particularly in the unscripted Q&A, was as real as it appeared to be:
The people that are Tesla Energy believe in their mission.
Batteries are a critical enabler for both the electrification of transportation and decarbonisation of power generation. The Gigafactory’s mission is to enable this transition.
For electric vehicles to be competitive purely on price with combustion engines, battery prices must fall below $200 per kilowatt hour at today’s gasoline price in the USA (see graphic).
Wind & solar PV are already competitive with coal, and vastly cheaper when externalities are included. In order to competitively displace natural gas, particularly peaking plants, inexpensive power storage is required (note that demand management can greatly help reduce peak demands and thus storage needs).
If the Gigafactory is successful, the world’s environment improves. As the World Health Organization (WHO) reports, there are 3 million premature deaths from air pollution annually. In the US, the American Lung Association found that “166 million Americans live with unhealthful levels of air pollution, putting them at risk for premature death and other serious health effects like lung cancer, asthma attacks, cardiovascular damage, and developmental and reproductive harm.”
We’ll also be able to enjoy cost-competitive, wicked-fast EVs and the resulting quieter sidewalks, parks, and outdoor cafes as air and noise pollution spewing combustion vehicles become relics of the past (see the The Great Horse Manure Crisis of 1894 for an excellent historical analog).
From what I observed, the employees of Tesla Energy appeared utterly dedicated to its success and are delighted to be a part of it. They’re thinking globally, not just about Gigafactory 1 and the factories that will follow. They believe they can change the world for the better.
What are they building and how are they building it?
It is clear from many critical design elements that the Tesla Energy team is not simply taking the most expedient route to complete their portion of this factory, but thinking holistically about both the entirety of Gigafactory 1 and future gigafactories. From site selection, architecture, engineering, and manufacturing, to end of product life recycling/remanufacturing, they carefully consider how their specific work goals impact the fully integrated project.
During our visit, particularly during ad-libbed Q&A, it was clear that the team is curious and aware of externalities. They are working cross functionally across departments to minimize or mitigate them.
Key site selection and architecture examples:
- The site itself was chosen to minimize transportation overhead and maximize on-site solar and wind power generation potential.
- Whereas solar PV installation is typically an afterthought, requiring gaps around pipes and roof-mounted equipment, careful attention was spent to ensure vast expanses contiguous roof space for PV panels.
- Covering the roof with PV will greatly reduce heat load, adding savings on top of the power generation that the PV will provide.
- The color scheme chosen for the building could have been Telsa red, but it’s primarily white to minimize heat gain, thereby reducing cooling loads.
Key manufacturing examples:
- Tesla made a concerted effort to collapse supply chain logistics into a single facility. This minimizes trans-national shipping of precursor parts. It is designed so that, wherever possible, raw materials come in and finished Powerwalls, Powerpacks, and vehicle battery modules come out.
- The layout of the factory ensures minimal movement of materials. The output of one section is the input of the adjoining one.
- Battery manufacturing incorporates heat recovery systems to reduce power loads.
- Solvents used to manufacture batteries are recovered and reused in a closed-loop system. This reduces both materials costs and environmental externalities.
- On-site recycling will facilitate the reuse of excess materials used in manufacturing, minimizing recycling logistics and related environmental impact.
- The Gigafactory will receive, render, and reuse end-of-life batteries as raw material inputs for new batteries.
While all of the above sound straightforward and logical, each decision required coordination across very disparate professional specializations to solve. Even considering these as problems to be solved required a curiosity about externalities and a holistic view.
All too often, in typical organizations, such matters are simply passed on to others such as:
- Recycling? We ship it to a contractor in India/China/other.
- Power? That’s in the facilities department budget. We don’t worry about that.
- Red. We like red. They can add another chiller, or whatever they call it, if they need to.
With a project as gargantuan as Gigafactory 1, many things can and still will go wrong. If Tesla Energy is successful, and able to produce low-cost, high-reliability power storage and world-doubling battery outputs, it truly will be transformative at a global scale. If the people of Tesla Energy continue working together as well as they have been and keep the faith that they really can change the world for the better, I think they will.
All Photos by Stephen J. Veneruso
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