Tesla (TSLA, Financials) is expanding its energy storage business with a new Megapack manufacturing facility in Texas, marking its third such site globally. The company secured a tax abatement agreement with Waller County to develop the plant near Houston, according to local government documents.

Nestled in the Empire West industrial park close to Katy, Texas, the complex covers one million square feet. Before legally reusing the facility for battery storage manufacture, Tesla had already leased it. The action fits well with Tesla's larger plan to expand its energy storage division, which has become more and more crucial in line with its main electric car business.

According to Tesla executives, the facility will be built as a copy of the company's current Megafactory in Lathrop, California, intended for Megapack battery storage system manufacture. Additionally run by the corporation is another Megapack production facility in Shanghai, China.

Tesla intends to make various changes to the site as part of its conversion, including improving heating and cooling systems to satisfy production needs and increasing electrical capacity. To support activities at the new facility, the business plans to add $150 million worth of manufacturing tools.

Designed for huge energy storage, Tesla's Megapack batteries enable industrial power backup systems and renewable energy networks. Growing demand for its energy storage technology, which rivals offers from other energy storage companies like Fluence Energy (FLNC, Financials) and NextEra Energy (NEE, Financials), supports the extension of its manufacturing footprint.

Tesla shares declined following the news. The stock was down 4.2% at $267.30 as of 11:45 a.m. GMT-5 on Thursday.