Tesla is now entering the Texas power sector. They formed a unit called Tesla Energy Ventures LLC and applied to be a retail electricity provider in August 2021. The Public Utility Commission approved their application to Texas in November 2021. This means that Tesla can now sell electricity on the ERCOT grid.
More than 130 REPs are located in Texas. Many of them own more than one business. Tesla is unique in that they have many home solar systems with energy storage capability, so they have access both to distributed generation and plenty of data. Tesla can purchase electricity from its customers and then sell it on the grid. Instead of relying on large-scale generators, They can sell electricity during supply shortages by having access to distributed energy storage systems (Tesla Powerwalls).
Tesla also invested in utility-scale batteries in Texas.
- Tesla began construction of a 100-MW energy storage facility in Angleton, Texas, in March 2021. Angleton is 40 miles south of Houston. It can power more than 16,000 homes.
- Tesla also applied for a 250-MW system of batteries, which would be located near their Austin gigafactory.
Ana Stewart is the president of Tesla Energy Ventures LLC and serves as director of regulatory credit trading for Tesla. She has led Tesla’s sale of over $3.8 billion worth of credits to oil and natural gas companies, automakers, retail electricity suppliers, and other entities that have the legal requirement to purchase renewable energy credits.
Tesla’s Potential Strategy for Electricity Sales In Texas
Although Tesla was previously involved in the power sector, they have avoided direct electricity sales. Instead, they have focused on energy storage systems for electric businesses and behind-the-meter solar storage systems for consumers.
- Tesla has become a REP in Texas and can now offer electricity plans for consumers who own their products. This allows them to take advantage of their brand recognition.
- Tesla’s products for residential customers include solar roof tiles, solar panels, and the Tesla Powerwall.
- Customers of Tesla are using their mobile app and web to interact with them, which can be used as marketing tools for electricity plans.
Tesla could create a virtual plant in Texas if enough customers have distributed generation and storage. A VPP combines multiple smaller systems with a smart control platform. It can be used to act like a conventional power station. Tesla already operates a similar project in South Australia. It connects 50,000 solar panels to achieve a total generation of 250 MW and an energy storage capacity of 650,000 kWh.
A similar system could be implemented in Texas by Tesla to store and sell energy when electricity prices are high. Texas wholesale prices tend to rise when there is high consumption and emergencies. During the Winter Storm Uri power outages, prices rose from $50/MWh to $9,000/MWh.
One of the reasons Tesla decided to open a Texas electricity retailer was the February 2021 blackouts. Home battery systems could connect to virtual power plants, making the grid more reliable and stable at local levels. Tesla offers electricity plans in the UK and Australia. Home energy storage plays a significant role in both of these cases.
Brookfield Asset Management, Tesla and Dacra (realty developer) have partnered for innovative residential housing in Austin. It is called SunHouse at Easton Park. The community can send surplus electricity to the grid, so all homes are equipped with solar panels.
The 4680 Cell Tesla’s Key Technology
The new 4680 cell from Tesla is an example of how Tesla is improving battery technology. IEEE Spectrum says that the 4680 cell is five times larger in storage capacity and six times as powerful as its predecessor, the 2170 cells. This increased capacity means that an electric vehicle will have a 16% greater range. The 4680 cell is 5.5x larger than the 2170 cell. But scaling up production at the required rate is difficult. Tesla plans to produce 100 GWh capacity by 2023 and 3,000GWh by 2030.
Tesla will sell 500,000 EVs by 2020. However, the company could produce 20 million vehicles annually to meet its 3,000 GWh production goal. The 4680 cell isn’t a Tesla invention. These cells are also being manufactured by companies such as Panasonic and LG. Elon Musk tweeted that Tesla plans to continue purchasing from them to help it meet its EV production goals.
The tab-less design of the 4680 cells has two benefits: it makes manufacturing easier and reduces the chance of overheating due to the battery’s lower electrical resistance. The new cells could achieve a 56% decrease in cost per kilowatt-hour of storage capacity.