Tesla wants to become an electricity supplier in Texas

Tesla wants to become an electricity supplier in Texas

Tesla Motors CEO Elon Musk reveals Tesla Energy batteries to businesses and utility companies at an event on April 30, 2015 in Hawthorne, California.

Patrick T. Fallon | Reuters

Tesla wants to sell electricity directly to customers in Texas, according to a request the company filed with the Public Utilities Commission this month.

The request follows Tesla’s start of construction of a large battery in Angleton, Texas (near Houston), where it aims to connect a 100 MW energy storage system to the grid. Texas Monthly first reported on an application submitted by a wholly owned subsidiary of Tesla called Tesla Energy Ventures.

Tesla has built several large-scale energy storage systems around the world, one operating east of Los Angeles, the other in Monterey, California, and two in Australia – one in Geelong, Victoria and the ‘other in Adelaide, South Australia. In.

However, Tesla does not act as a retail electricity supplier where it installs these systems. Instead, the larger batteries made by Tesla are helping other companies produce, store, and consume energy.

A cold snap gripped Texas in February this year, leaving millions of residents stranded for days without electricity or water.

Some officials initially blamed the intermittent nature of renewables, even though the state runs largely on fossil fuels.

It later emerged that state lawmakers and regulators, including the Public Utilities Commission and the Texas Railroad Commission (which is supposed to regulate the oil and gas industry), had changed their requirements to fix and prevent further vulnerabilities. in the Texas power grid. ignored or softened. Following the previous blackout, experts called for such efforts as sealing devices and turbines used to generate electricity with proper insulation and heaters.

The Texas grid is isolated from the rest of the United States, so transmission of electricity from other states was not available to provide relief to those caught in the cold. Instead, the Texas grid is managed by the Electric Reliability Council of Texas, or ERCOT, a nonprofit group that essentially determines the flow of electricity to more than 25 million homes in Texas.

During the Texas blackout crisis, Tesla CEO Elon Musk called ERCOT on Twitter, Write That the group did not “earn this R”.

Musk’s name was not directly on the Tesla Energy Ventures app. At the top of this subsidiary, in the role of chairman, is Anna Stewart, director of regulatory credit operations at Tesla.

As CNBC previously reported, Musk’s electric car and solar panel company has been able to squeeze its margins through sales of green credits over the years. For example, in the second quarter of 2020, regulatory credit sales exceeded the company’s free cash flow and more than four times Tesla’s net income of $ 104 million for the quarter.

Companies that need it, including automakers, oil and gas suppliers, and retail energy providers, buy environmental regulatory credits to comply with regulations that limit the amount of greenhouse gases emitted each time. year.

According to his resume, which was part of the candidacy, Stewart has helped Tesla receive more than $ 3.8 billion in regulatory credits since 2017.

If it gets approval as a retail electricity supplier in Texas, Tesla Energy Ventures will use employees from Tesla’s energy division – the same that sells solar roofs – to increase sales and provide a customer service in the state. Tesla’s request also says it will work with Angie Energy Marketing on the planning.

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