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Elon Musk is about to become a Texas power broker – literally.
The idiosyncratic serial entrepreneur who reinvented rocket science and bolstered the electric car business has founded a new Tesla subsidiary called Tesla Energy Ventures, which filed an application with the Texas Public Utility Commission to sell electricity in the retail market in mid-August.
Details of the move are sparse, and Tesla isn’t speaking, but if the filing is approved in November, people involved with the state’s power market say the new Tesla Energy Ventures could stand out in a crowded, deregulated retail market in the 120 other companies are already selling kilowatts.
Tesla, which markets itself as a premium brand, is unlikely to be among the bargain retailers struggling to attract customers by running interstate billboards that offer free power at night and on weekends. Tesla could sell kilowatts that are either drawn from the grid – if it works – or drawn from Tesla household batteries when the grid fails. What is important is that Tesla could also let individual Texans earn money with solar panels by sharing their excess electricity with the grid. Today only large commercial customers can do this without any problems.
Tesla also announced to the state’s grid operator that it plans to build two giant utility-scale batteries that will serve the state’s wholesale power companies. A 250-megawatt battery would be located near the Gigafactory under construction outside of Austin, where Cybertrucks and Model Y SUVs are to be built. Another massive battery would be located outside of Houston, according to Bloomberg.
All of this would be a significant addition to Musk’s growing ambitions in Texas, where he recently moved after leaving California. Although Tesla didn’t respond to requests to speak about its new business, a Tesla Energy Ventures executive told me to try tweeting CEO Elon Musk for comment. Musk, who has more than 59 million followers, didn’t respond immediately.
People familiar with Tesla’s strategy tell me that the company was hoping to enter the state’s deregulated electricity market sooner. Then came the widespread power outages due to the February winter storms, which swept the power markets like an EF5 tornado, leaving over a hundred dead and charging the state for more than $ 10 billion in costs that providers like Brazos Electric Power Cooperative fail to pay for.
Five electrical retailers have left the market since February, including train wrecks like Griddy and others who are forced to buy power for $ 9,000 per megawatt hour on the spot market and then sell it to customers who had prices set below $ 50. Even while government regulators are considering reshaping the market to clean up this mess, companies like Tesla see opportunities. According to a record presented to me by a Public Utility Commission analyst, thirteen different companies have filed applications to sell power in Texas since the blackouts.
Tesla said in filing with the PUC that it plans to strengthen business with existing Tesla customers and reach them through its mobile app and website. The company, with its all-electric branding, appears well positioned to tap into a loyal customer base interested in moving beyond fossil fuels. Additionally, many Texans already appear to be the kind of electricity buyers and sellers that Tesla’s new energy company could serve. According to federal energy data, Texans had installed more than 1 gigawatt of private solar panels by June. That only follows Arizona and California. (By comparison, the South Texas Project Electric Generating Station’s two nuclear reactors can each generate 1.28 gigawatts of electricity.) With all of these new solar panels and Tesla’s Powerwall batteries controlled by Tesla-managed algorithms, Texas households could potentially use Tesla to become their own power plants in the interconnected network.
That could bolster the bottom line of Musk’s company and would be in line with Tesla’s expectations. In 2020, Musk told investors that he believed Tesla’s energy business could one day rival electric vehicle manufacturing. “I think Tesla Energy will be about the same size as Tesla Automotive over the long term,” he said.
For Musk, the benefits of Tesla’s foray into the Texas power market can also be personal. He might have the chance to drive a vehicle made in Texas by one of his companies and charge it with electricity sold by another of his companies while driving around Boca Chica – sorry, Starbase to see missiles take off from one of his companies. At this rate, Tesla may want to rename itself Texla.
While Tesla could be a welcome addition to the state’s troubled power grid, Musk has made many promises he has yet to fulfill. (When is this hyperloop coming?)
But anyone who can get a sports car into space for good reason seems to fit pretty well into the wild west of deregulated electricity markets. Welcome to Texas, Elon. Stay a while Something interesting is about to happen.
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