100 Gigafactories

Last week National Geographic launched its climate change movie, Before the Flood, online globally for free viewing. The film offers the opportunity to join Leonardo DiCaprio as he explores the topic of climate change, and discover what might be done today to address it. I sat down at home and watched it through YouTube on its opening night.

DiCaprio tours the world, talking to scientists, business people, Pacific islanders and many others. One riveting conversation is with Elon Musk, founder and CEO of Tesla, filmed as he and DiCaprio tour the Tesla GigaFactory in Nevada. This is a truly gargantuan building, with the largest physical footprint on the planet, designed to build batteries on an immense scale. The conversation moved onto the energy transition;

Elon Musk: We actually did the calculations. What would it take to transition the whole world to sustainable energy? What kind of throughput would you actually need? You need a hundred Gigafactories.

DiCaprio: A hundred of these?

Elon Musk: Yes, a hundred of these.

DiCaprio: That’s it?

Elon Musk: That would do the whole world, all energy!

DiCaprio: That’s it? That sounds manageable.

I agree with DiCaprio, building 100 GigaFactories seems like an entirely plausible venture. But what would this mean and what impact might it have?

According to the Tesla website, the GigaFactory will produce 35 GWh of battery capacity per annum. A 200-300 mile range Tesla currently has an 85 kWh battery, which means that a Gigafactory can produce about 400,000 such batteries per annum. 100 Gigafactories would produce at least 40 million such batteries per annum. There are also reports in the media of the current Tesla Gigafactory being expanded, which means there is upwards room in this estimate. Although Elon Musk made mention of 100 Gigafactories, we don’t know exactly what capacity per factory he was assuming. But on this basis and assuming improvements in Electric Vehicle (EV) efficiency and also allowing for smaller city vehicles which would have smaller batteries, the 100 Gigafactories should be able to supply batteries for all new vehicles in a 100% EV fleet, assuming some 80 million new cars per annum (currently 70 million cars per annum).

Such an outlook potentially meets all the battery requirements for cars, but would that put sufficient storage into the energy system to balance the intermittency requirements for a 100% renewable energy grid? And is this sufficient for all energy as Elon Musk stated?

Over the course of an energy system transition to net-zero emissions such as illustrated in the recent Pathways to Net-Zero Emissions publication from the Shell scenarios team, we could potentially see the electricity system grow from some 80-90 EJ today to 300 EJ, a several fold increase. This results from both a growth in the overall size of the energy system and a shift in electrification from some 20% of final energy now to over 50%. If that system is to be powered entirely by renewable energy, as imagined by Elon Musk, it would need long distance grid connection and some form of energy storage. Assuming grid connections are not truly intercontinental, e.g. joining the Americas with Europe and Africa, then each continental mass would need to manage its own intermittency.

In 2015, North American power generation was in excess of 5000 TWh, but in a highly electrified energy system, demand would likely be significantly higher. Assuming at least 300 million cars in North America, that might represent up to 20 TWh of storage if all are EV and available for backup (N.B. In a highly accelerated-EV scenario I developed for an earlier post, the global EV stock only exceeds 300 million in 2031 but reaches 1 billion in 2042). While it is highly unlikely that renewable energy generation would drop to zero across all of North America at any one time, this level of storage could theoretically power the grid for around a day. Given that over 90% of cars are parked at any given time, instantaneous vehicle use isn’t really a factor, however the backup requirement would need a significant percentage of the parked cars to be physically connected to the grid at any one time.

Is this enough storage? The answer to that isn’t simple at all and probably requires a complex computer simulation of the entire system. Certainly if the grid is heavily dependent on solar then in winter there are several hours a day when the entire North and South American continents are in darkness. But given a distribution between wind, solar and hydroelectricity, together with continental inter-connection, this amount of storage feels at least plausible.


But this isn’t all energy, as even in this very electrified scenario only 50% of final energy is actually electricity. The remainder is largely hydrocarbon based in services such as aviation, shipping, heavy ground transport and a wide variety of industrial applications (cement, metals refining, chemicals etc.). These hydrocarbons might still come from fossil fuels in which case CCS will be required or they could originate from biomass.

A world of 100 Gigafactories all building vehicle batteries for an all EV fleet, with a grid powered by wind and solar, reliably backed up by those same vehicles connected to the grid, is aspirational given where we are today. It would require considerably more than just building the Gigafactories and such a transition would be measured in many decades rather than many years. But it’s certainly an interesting outcome to consider.

“The New Lens Scenarios” and “A Better Life with a Healthy Planet” are part of an ongoing process – scenario-building – used in Shell for more than 40 years to challenge executives’ perspectives on the future business environment. We base them on plausible assumptions and quantification, and they are designed to stretch management thinking and even to consider events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes, and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.
It is important to note that Shell’s existing portfolio has been decades in development.  While we believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario, it includes assets across a spectrum of energy intensities including some with above –average intensity. While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years.