Tesla is turning to the Arizona desert for a major new source of clean electricity. The project shows how the company is expanding beyond electric vehicles and growing its energy business. The project, called Sterling, is being built in Mohave County, Arizona. It will combine a large solar farm with a battery storage system. Energy company ContourGlobal is developing the facility, while Tesla has agreed to buy most of its expected electricity output.
The project will include 509 megawatts-peak (MWp) of solar capacity and a 360-megawatt battery system. It is expected to produce more than 1.1 terawatt-hours (TWh) of electricity each year when fully operational. Construction is underway, with completion planned for 2028.
Tesla has signed a long-term power purchase agreement (PPA) covering about 90% of the project’s expected electricity output. This deal gives Tesla access to a large supply of solar power without requiring it to own and operate the facility.
The project also shows why batteries are becoming important to the clean energy market. Solar panels produce electricity when the sun shines, while batteries store some of that power for use later in the day.
Project Sterling will cover more than 2,000 acres in the Mojave Desert, about 20 miles north of Lake Havasu City. It will include more than 760,000 solar panels and over 300 battery storage containers. The project has several key features:
ContourGlobal will build, own, and operate the facility. Tesla will buy most of the electricity under its long-term agreement. According to ContourGlobal, the combined solar and battery system is designed to provide electricity for up to 16 hours a day. Actual supply will depend on sunlight, battery charging, operating conditions, and the terms of the power agreement.
Antonio Cammisecra, President & CEO of ContourGlobal,
“Arizona’s sun has been shining on this land for billions of years. Project Sterling will put it to work by turning sunlight into electricity and storing part of that energy for delivery after sunset. Today’s ceremony marks the visible beginning of our partnership with Mohave County, the State of Arizona, and our customer, Tesla. We are thrilled to celebrate this milestone with them and with the people who will now build this plant safely, with respect for the local community and the land of the Mojave Desert.”
The project will use lithium iron phosphate (LFP) batteries. This type of battery is widely used in large energy storage systems. The facility will also have liquid cooling and built-in fire protection.
ContourGlobal says Sterling is its largest renewable energy project worldwide and its largest power purchase agreement to date. A group of international banks is supporting the project’s financing through an equity bridge loan, a type of temporary financing used during project development and construction.
Solar power has one major limit: it depends on sunlight. Panels produce electricity during the day, but output falls in the evening and can change with the weather.
Batteries help solve this problem. They store electricity when solar production is high and release it later when demand rises or sunlight fades. This makes solar power more useful for businesses that need electricity at different times of day. It can also help reduce exposure to changing electricity prices. However, the savings depend on market conditions and the terms of each power contract.
For Tesla, Project Sterling offers a long-term source of contracted clean electricity. The deal also shows how companies can support new renewable energy projects by agreeing to buy their power.
However, Tesla will not own the Sterling facility. ContourGlobal is responsible for building and running it, while Tesla is the main buyer under the power agreement.
The deal also does not mean all the electricity Tesla uses will come from renewable sources. The project’s wider impact will depend on how much power it delivers, when that power is used, and how Tesla accounts for its energy use.

Arizona is well suited to solar power because it receives abundant sunshine. The state already has a large solar industry, and projects that combine solar panels with batteries could help expand its role in the US energy market.
The Solar Energy Industries Association’s March 2026 state profile ranked Arizona third in residential solar capacity and fifth in utility-scale solar capacity. The state had nearly 9,800 solar jobs and attracted about $2.9 billion in solar investment during 2025, according to the association.
Large projects such as Sterling could add more renewable electricity to the region. Batteries may also help supply power when solar output drops, making it easier to use renewable energy at different times of day.
Energy storage is growing across the United States, too. The SEIA and Benchmark Mineral Intelligence reported that the country installed 9.7 GWh of energy storage in the first quarter of 2026, up 32% from the same period a year earlier.

The groups also forecast more than 610 GWh of total installed storage capacity by 2030. These figures cover the wider US market, not just Tesla projects. Still, they show how batteries are becoming a bigger part of the country’s energy system.
Tesla is known mainly for electric vehicles, but energy storage is another important part of its business. Its products include Megapack, a large battery system for utilities and businesses, and Powerwall, which helps homes and smaller businesses store electricity.
These products can help customers save power for later use, manage their electricity needs, and support the wider power grid. Tesla reported deploying 13.7 GWh of energy storage products in the third quarter of 2026. It also delivered 486,532 vehicles during the quarter. The company had scheduled the release of its full third-quarter financial results for October 21.

Project Sterling is separate from those reported deployments because the facility is still being built. Once completed, it will add another large solar-and-battery project to the market in which Tesla operates.
The deal also shows that Tesla can expand its energy business by working with other companies. ContourGlobal will finance and run the facility, while Tesla will buy most of its electricity.
The project’s financial results will depend on the final cost, the amount of electricity delivered, and how well the facility performs. The companies have not disclosed the price Tesla will pay for the power.
Tesla (TSLA) stock gained 2.05% on October 9, closing at $382.70, after rising from $375 on October 8. Despite the recent rebound, shares remain volatile as investors assess Tesla’s vehicle sales, autonomous-driving plans, and growth prospects.

Solar panels generate electricity without directly burning fossil fuels. Batteries can store that electricity and release it later, which may reduce the need for power from coal or natural gas plants. However, the project’s total climate benefit will depend on which power sources its electricity replaces. Manufacturing solar panels and batteries, building the facility, and producing battery materials also create emissions.
The battery system is important because it allows some solar power to be used after the sun goes down. But batteries do not generate new electricity. They store power produced elsewhere, and some energy is lost when batteries charge and discharge.
The project’s actual emissions savings will therefore depend on how it operates and the wider electricity supply in the region. For Tesla, the agreement provides access to a large amount of contracted clean electricity. For Arizona, the project adds new solar and storage capacity and is expected to support hundreds of construction jobs.
Project Sterling shows how solar power and battery storage can work together to supply electricity at different times of day. Its large capacity, long-term agreement with Tesla, and planned 2028 completion make it an important addition to Arizona’s clean energy pipeline.
For Tesla, the deal offers access to renewable electricity without the need to own the facility. For ContourGlobal, the agreement provides a major customer for its new solar-and-storage investment.
The project’s final climate and financial benefits will depend on how much electricity it delivers, how well the system operates, and which power sources it replaces. Still, projects that combine solar panels with large batteries are playing a growing role in the shift toward cleaner electricity.












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