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Electric Carmaker Tesla Wants to Become an Electricity Provider

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Rakesh  Sharma's picture
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  • Aug 30, 2021 10:23 am GMT
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A subsidiary of electric car maker Tesla has filed to become a retail electricity provider (REP) in Texas. Tesla Energy Ventures, which is headed by an executive who helped sell $3.8 billion worth of regulatory credits to customers, will sell electricity drawn from the grid and from Tesla battery storage. The company also plans to allow customers for its solar panels to sell excess electricity back to the state’s grid.

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Tesla is already building two massive battery storage facilities in the state. One of them is at its car manufacturing facility in Austin. The other one is located outside Houston and will be connected to the grid, according to an earlier Bloomberg piece. The intended customers for the latter installation are wholesale power producers and it is reportedly being developed by a differently company called Gambit energy.

 

Tesla already has considerable experience with battery storage projects. In California, the company is responsible for the Mira Loma substation, an 80 MWH Powerpack station with Southern California Edison. It has also developed one of the world’s biggest battery projects in Australia. Given this experience, the company’s filing is an effort to provision for and shore up supply for its own facilities.

 

According to reports, the filing also mentions an app and a website that is intended to “drum up business” among existing Tesla customers. Reports also mention Autobidder, the company’s energy markets software platform for utilities, that might play a role in its bid to become a retail electricity provider.

 

Tesla Energy Ventures, which was formed after the company’s acquisition of SolarCity in 2016, is expected to become a substantial revenue earner for Tesla in the future. Analyst Alexander Potter of Piper Sandler has predicted that it could be responsible for up to 30% of the company’s total revenue by the 2030s.

 

Tesla and The Texas Grid 

 

Tesla’s filing is not an unusual development, given the company’s extensive ambitions in developing a renewable energy system. The more important story here is a refashioning of the Texas grid. Even as five companies declared bankruptcy after the February surge in prices, thirteen different companies are vying to enter the state’s deregulated electricity market.

 

Many have ambitions similar to Tesla. For example, Almika Energy, a subsidiary of JP Energy Resources – a retail electric provider in the state, is offering an “integrated energy offering” consisting of its solar energy and a smart suite of applications for customers.  

 

The state’s electricity grid bolstered its battery storage capacity to 1400 MW to prepare for the summer and it has plans to add 37,000 MW of solar and wind are being connected to ERCOT. According to ERCOT, battery storage numbers will jump from 225 MW at the end of 2020 to 1,771 MW by 2021 and 3,008 MW in 2022. That increase in installations is not restricted to Texas. California also plans to boost its share of battery storage capabilities. A recent survey by solar installation companies also found that "extreme weather events" are pushing consumers towards solar and storage.  

 

Of course, all of this activity doesn’t really solve the main problem of a high levelized cost of electricity (LCOE) for lithium-ion batteries. Whether it will come down as a result of a surge in installations is still debatable.  

One of the interesting aspects about Tesla’s plans is that the company will enable users of its battery storage to sell power back to the grid. Collect enough such users and you can have a transactive microgrid spanning a small neighborhood or region, regulated and managed by Tesla’s algorithms. This is certainly not an innovative business model. It has been proposed by several startups, such as Brooklyn Microgrid, earlier. With its resources, heft, and reach, Tesla might become the first company past the post.

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Bob Meinetz's picture
Bob Meinetz on Aug 30, 2021

"The company also plans to allow customers for its solar panels to sell excess electricity back to the state’s grid."

Rakesh, how could a publicly-held solar panel manufacturer allow customers to sell electricity from its products back to the ERCOT grid?

"Tesla Energy Ventures, which was formed after the company’s acquisition of SolarCity in 2016, is expected to become a substantial revenue earner for Tesla in the future."

Either that, or: Tesla Energy Ventures, a company formed after Elon Musk strong-armed the board of Tesla Motors, Inc. into buying bankrupt Solar City, is another flailing attempt by an entrepreneur to make solar energy profitable after a string of past failures:
 

"Tesla CEO Elon Musk began testifying in a Wilmington, Delaware, court on Monday for lawsuit that could ultimately cost him billions of dollars if it doesn’t go his way. A group of shareholders brought the lawsuit against the carmaker’s board of directors over their decision to acquire SolarCity, a solar panel company, in 2016."

The Solar-Panel Drama That’s Dragged Elon Musk Into Court Again

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