About a decade ago, Tesla entered its solar-for-homes era with its contentious acquisition of SolarCity.
Now, Tesla’s solar dreams are taking a different shape as the company enters its AI era.
Tesla has inked two long-term agreements to purchase power from utility-scale solar projects totaling about 600 megawatts of planned capacity.
ContourGlobal, a global power producer, announced on Tuesday that Tesla signed a long-term agreement to purchase 1 terawatt-hour of electricity a year from Project Sterling, ContourGlobal’s solar and battery storage project in Arizona. The deal covers about 90% of the project’s expected output — roughly enough electricity to power about 100,000 US homes a year.
Renewable-energy developer Zelestra separately announced Tuesday that Tesla would purchase the entire output of its 140-megawatt Lumen Farm solar project in northeast Texas. Zelestra CEO Phil North said in a statement that the project will support Tesla’s “growing energy needs in Texas.”
The deals reflect Elon Musk’s latest arc from leveraging solar power for consumer homes to solar use in industrial settings, which could include AI infrastructure.
Tesla’s humble $2.6B solar beginnings
When the CEO proposed buying SolarCity, a rooftop solar installer and financier, in 2016, Musk framed the $2.6 billion deal as a way to create a seamless, end-to-end solution combining solar energy, battery storage, and EVs.
“Tesla customers can drive clean cars and they can use our battery packs to help consume energy more efficiently, but they still need access to the most sustainable energy source that’s available: the sun,” Tesla said at the time.
The rooftop solar business didn’t disappear. Tesla said in its first-quarter shareholder update in April that it had begun “meaningful customer deployments” of residential solar panels produced at its New York Gigafactory. Tesla also continues to sell Powerwall batteries for homes.
Andrew Harrer/Bloomberg via Getty Images
In recent years, however, Musk has increasingly focused his solar ambitions on the grid, as AI is expected to drive surging power demand and Tesla stakes more of its future on AI and robotics.
Tesla’s AI bet relies on the sun
Tesla has warned investors that data centers supporting its AI services and products will have “substantial power requirements.”
The company said in April that it expected 2026 capex to exceed $25 billion as it builds factories and infrastructure for projects including its Robotaxi business and the Optimus humanoid robot. Both ventures depend on large-scale AI training infrastructure. Tesla also plans to build a semiconductor research fab as part of its long shot chip manufacturing ambitions.
Musk has simultaneously been raising the stakes for industrial solar power amid the AI boom. In a January earnings call, the CEO said “the solar opportunity is underestimated,” and that solar paired with batteries was the “best way” to add more power to the grid.
During Tesla’s latest earnings call, on July 22, Musk said hyperscalers are struggling to secure enough electricity for AI compute, necessitating alternative energy sources.
“There’s far more power available from the sun than anything else, by far,” Musk said. “We think power constraints are going to be — they already are — a major issue for AI.”
The two latest solar deals make Tesla a major buyer of utility-scale solar power. The EV maker has committed to purchasing nearly all of Project Sterling’s annual electricity output and all of Zelestra’s Lumen Farm output.
ContourGlobal said commercial operations are expected to start in 2028 and that Sterling will be the company’s “largest renewable asset to date.” Zelestra said it expects full operations to start by 2029.
Neither agreement identified which Tesla operations the power purchases will exactly support. Spokespeople for ContourGlobal, Zelestra, and Tesla did not respond to requests for comment.
As Musk’s broader arc in solar energy has come into focus, solar is no longer powering only homes and cars but also the infrastructure of an AI-driven future.
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