Through its acquisition of SolarCity, Tesla took over a longstanding lawsuit against Salt River Project (SRP), an electric utility in Arizona, over the company’s practice of imposing “unfair” fees on potential solar power purchasers, which has virtually killed the local solar market.

After a 3-year legal battle, the two companies have reportedly come to a settlement, which could lead to a large Tesla Powerpack project and discounted Powerwalls in Arizona.

As we’ve previously reported, SRP’s new charges for people wanting to connect their home rooftop solar array made the systems financially unviable in most cases. The electric utility tried to have the lawsuit dismissed on several occasions, but it failed.

Most recently, the suit went to the Supreme court, but now local media are reporting that SRP’s board of directors has approved a settlement with Tesla over the lawsuit.

Arizona Central reported the broad terms approved by the SRP board:

  • SRP to purchase a 25-megawatt battery that will be installed at the Agua Fria Generating Station in Peoria. O’Connor said SRP would pay market price. A battery that size can power about 6,000 homes at once and costs about $10 million, based on public statements from Tesla on pricing of other projects.
  • SRP to launch a “limited” incentive program for residential batteries. O’Connor said incentives would be given to customers, not Tesla, but did not cite a dollar figure.
  • SRP to launch a limited program for customers to test new demand rates. The rates, which are the subject of the litigation, charge customers a fee for the peak amount of electricity they draw from the utility each month.
  • The litigation to be dismissed with prejudice.
  • Each side to pay their own legal fees.

It would create one of the largest Tesla Powerpack projects in the country and make it cheaper for local rate payers to add a Tesla Powerwall to their system.

The settlement would be in line with the government’s energy storage goals.

Earlier this year, Arizona announced a new target of 3 GW of energy storage capacity installed by 2030.

Tesla’s energy division has been on a roll lately. Aside from a few very publicized projects in Australia, Tesla also recently deployed Powerpack projects at SpaceX’s new spaceport in Texasa ski resort in Tahoewith NY’s largest electric utility, and more.

The rollout of the Powerwall, Tesla’s residential battery pack, is also picking up speed. Tesla recently deployed over 300 Powerwalls in Hawaiian schools to cool down hot classrooms and they signed a deal with the South Australian government to deploy Powerwalls and solar power in 50,000 homes to create biggest virtual power plant in the world.

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