Tesla secures 90% of 509 MW Arizona solar-plus-storage project output

Tesla has signed a long-term deal to buy 90% of the output of Project Sterling, a big solar and battery plant going up in Arizona. This coverage centres on Tesla buys 90%.

The project pairs 509 MW of solar with a 360 MW battery, and it’s being built by ContourGlobal, the power producer owned by private equity firm KKR. It’s expected online in 2028.

Neither company disclosed financial terms. ContourGlobal will keep and trade the remaining 10% of the output itself. Deals like this usually run 10 to 15 years, so Tesla is locking in Arizona clean power well into the 2030s. It’s the first agreement between the two companies, and ContourGlobal, which picked up the project in late 2024, calls Project Sterling the largest renewable asset in its portfolio.

The plant connects to the Western Area Power Administration grid, which gives it access to California markets. The 360 MW battery is a four-hour system, roughly 1,440 MWh of storage, enough to keep pushing solar power onto the grid after the sun goes down.

Two big solar deals in one day

This is the second large solar PPA Tesla signed today. Earlier, Tesla and Spanish developer Zelestra confirmed a deal for the entire output of a 140 MW solar farm in Texas. Put the two together, and Tesla contracted more than 640 MW of third-party solar, plus 360 MW of battery storage, in a single day.

The reason is the same one driving every hyperscaler right now. Electricity demand is climbing fast, AI data centers are tightening US power markets, and Tesla has its own growing load to feed, from Gigafactory Texas to its expanding AI compute. It needs cheap, clean power, and it needs it locked in.

Tesla makes batteries, and it’s buying them

Here’s the part that stands out. Tesla builds the Megapack, the best-selling grid battery in the world, and it already has one of Arizona’s largest Megapack installations online. It sells solar panels and is building a 100-GW solar panel factory in Texas.

Yet for Project Sterling, Tesla is buying both the solar and the storage from a KKR-owned developer rather than building it. Neither company said whose batteries the plant will use.

That’s the tradeoff of being a power buyer instead of a power builder. Tesla makes the hardware, but it doesn’t develop and operate utility-scale solar-plus-storage plants at the speed it now needs. So it signs PPAs, the same as Meta and Google.

Electrek’s Take

Two solar PPAs in one day tells you how seriously Tesla is taking its own power problem. Its electricity needs are growing (factories, and now AI compute that eats megawatts), and it can’t wait. Locking in more than 640 MW of solar and a big battery for the late 2020s is a smart, unglamorous move.

But the irony from this morning’s Texas deal is even sharper here. Tesla doesn’t just sell solar panels. It makes some of the best grid battery on the market, and it’s buying a 360 MW battery’s worth of stored solar from someone else – though I. wouldn’t be surprised if the projects ends up using Megapacks, which would mean Tesla would be buying back battery capacity that it manufactured.

There’s a version of Tesla that builds Project Sterling itself, with its own panels and its own Megapacks, and books the whole thing as a win for its energy business. That’s not the Tesla we have. It gutted its solar arm years ago and is only now rebuilding.

As data centers put mounting pressure on the grid and electricity rates climb, solar and batteries are becoming essential home infrastructure, not a luxury. With electricity rates up almost 10% last year and expected to keep climbing, going solar is one of the best ways to protect yourself against rising costs. And with lease and PPA options, you can do it with zero upfront cost and start saving immediately. If you want to find the best deal, check out EnergySage. It’s a free service with hundreds of pre-vetted installers competing for your business, so you save 20 to 30% compared to going it alone. No sales calls until you pick an installer. Get your free quotes here.