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Tesla move to sell electricity in Texas is a risky move

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  • Tesla has submitted an application to begin selling electricity to Texas residents.
  • Tesla Energy Ventures is a Tesla subsidiary that aims to expand the company’s role in the energy sector. Tesla is well-known for selling electric vehicles, solar panels, and solar batteries, but it has never been an energy provider.
  • The Texas energy industry is in flux following this February’s winter storms. Following the storms, several energy providers exited the market, and many Texans are concerned that the power grid is not reliable enough.

Tesla has applied to become a Texas retail electric provider (REP). On August 16, 2021, the company filed an application with the Texas Public Utility Commission. Tesla, if approved, will sell electricity to Texans who live in deregulated areas. Deregulated energy markets exist in approximately 85 percent of Texas, including major cities such as Houston, Dallas, Fort Worth, and Arlington.

Tesla Energy Ventures was founded by entrepreneur Elon Musk in order to enter the retail electricity market. Musk, on the other hand, will not be in charge of Tesla Energy Ventures. Ana Stewart, on the other hand, fills the role of President. Stewart has a wealth of relevant experience in the energy industry, including time spent as a senior analyst and analyst for renewables portfolio management at Direct Energy, a Texas-based retail electric provider (REP). If the Texas Public Utility Commission approves the application, Tesla Energy Ventures will join the other 120 retail energy providers in the state’s deregulated market.

Tesla’s application states that it will use its existing Tesla Energy Customer Support as the point of contact for energy consumers. “The [Tesla Energy Customer Support team] has already established procedures and escalation paths in place to ensure timely action to customer inquiries. The Tesla Energy Customer Support organization will receive training on retail operations, procedures, and regulation to ensure adequate capability and effectiveness,” the application states.

Tesla also applied to the PUC for permission to build several utility-scale battery projects in Texas. One example is a 250-megawatt battery located outside of Austin. The second facility is a 100-megawatt battery located outside of Houston. This isn’t the first time a Tesla battery project in Texas has made headlines. Bloomberg reported in March on Tesla’s 100-megawatt battery project in Angleton, Texas, the company’s first major move into the state.

Tesla’s application expands its existing role in the energy industry

Tesla is not a newcomer to the energy industry, particularly in the electric vehicle and solar energy sectors. Tesla Powerwall is a well-known solar battery, and the company also distributes and sells solar panels to residential customers.

Texas’ energy market is expanding in solar energy, with the state currently ranking second in the nation for solar power generation. If Tesla Energy Ventures is granted permission to sell electricity to Texas customers, it may also offer net metering programmes to those who have Tesla solar products installed in their homes or businesses, allowing them to sell excess solar energy back to the power grid.

The risks within the Texas deregulated market

At the moment, entering the Texas energy market as an electricity provider could be a risky move. A major winter storm in February knocked out power generators across the state, leaving millions without power in subzero temperatures.

The wholesale cost of electricity reached an all-time high of $9,000 per megawatt-hour. To put this in context, the average wholesale cost at the time was around $50 per megawatt-hour. Several energy providers that purchased electricity found themselves in financial trouble because they had to sell the energy at a huge loss. Since the February storms, five real estate representatives have left the Texas market.

Furthermore, the Electric Reliability Council of Texas (ERCOT) has faced criticism for its management of the Texas power grid since February. Musk himself criticised ERCOT in February, tweeting that it was “not earning that R.”

On August 30, the PUC officially acknowledged that Tesla Energy Ventures’ application was complete and would be sent to the Commission for further review. Check out Tesla Energy Ventures’ application to the Texas Public Utility Commission for more information. For more information on this storey, you can also visit Texas Monthly, which broke the news of Tesla’s REP application last week.

Article by Choose Energy

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About the author

Brendan Taylor

Brendan Taylor was a TV news producer for 5 and a half years. He is an experienced writer. Brandon covers Breaking News at Insider Paper.




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