Tesla needs to change into an electrical energy provider in Texas

Elon Musk, CEO of Tesla Motors, unveils a Tesla Energy battery for businesses and utilities during an event in Hawthorne, California on April 30, 2015.

Patrick T. Fallon | Reuters

Tesla plans to sell power directly to customers in Texas, according to an application the company filed with the Public Utility Commission there this month.

The application follows the launch of a large Tesla battery in Angleton, Texas (near Houston), where a 100 megawatt energy storage system is scheduled to go online. Texas Monthly first reported on the application submitted by a wholly owned subsidiary of Tesla called Tesla Energy Ventures.

Tesla has also built several utility-scale energy storage systems around the world, including one east of Los Angeles, another in Monterey, California, and two in Australia – one in Geelong, Victoria, and another in Adelaide, South Australia.

However, Tesla has not acted as the retail electricity provider with whom it set up these systems. Instead, large batteries built by Tesla help other companies generate, store, and use energy.

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

Some officials initially blamed the intermittent nature of renewable energies, even though the state is largely powered by 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 ignored or weakened requirements to fix and prevent further vulnerabilities in the Texas power grid. After previous power outages, experts had called for measures such as weatherproof systems and turbines for power generation with appropriate insulation and heating.

The Texas power grid is isolated from the rest of the US so transmission of power from other states was not available to relieve those stuck in the cold. Instead, the Texas grid is managed by the Electric Reliability Council of Texas or ERCOT, a nonprofit group that essentially plans the flow of electricity to more than 25 million households in Texas.

During the blackout crisis in Texas, Tesla CEO Elon Musk pinched ERCOT on Twitter and wrote that the group “doesn’t deserve the R”.

Musk’s name was not directly listed in Tesla Energy Ventures’ application. This subsidiary is headed by Ana Stewart, Tesla’s director of regulatory credit trading.

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

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Companies that need them – usually automakers, oil and gas suppliers, and utility companies – buy green credits to comply with regulations that limit the amount of greenhouse gases they can emit each year.

According to her résumé, which was part of the application, Stewart has helped Tesla earn over $ 3.8 billion from regulatory credit since 2017.

Should Tesla Energy Ventures gain approval as a retail electricity provider in Texas, Tesla Energy Ventures will employ employees from Tesla’s energy division – the same company that sells solar roofs – to drive sales and provide customer service across the state. Tesla’s motion also states that it will partner with Engie Energy Marketing in the planning.

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