Elon Musk Proposes Tesla Power Company in Texas

In the wake of the poor performance of Texas’ power grid last winter and over the summer, Elon Musk has proposed a Tesla subsidiary that can provide power to the state’s Public Utility Commission. According to the paperwork related to the application, the subsidiary will be known as Tesla Energy Ventures.

Despite the success of its industrial-sized Megapack batteries, Tesla has previously avoided going into the retail energy sector. The seeming change of heart could have been sparked by challenges faced by the electric grid in Texas this year. With Elon Musk’s move to Texas from California and his companies’ increasing presence in the state, Musk may be looking out for the reliability of utilities that are critical to both Tesla and SpaceX.

When Texas was hit by three massive winter storms in rapid succession in February, power was knocked out more than 4.5 million homes and businesses. Experts say that the problems were caused by state officials’ failure to prepare its power plants for exceptionally harsh winter weather. Texas runs on a different grid system than the rest of the United States and failed to properly ‘winterize’ the power plants. Texas lawmakers attempted to blame the problems on renewable energy sources, a claim that was quickly debunked by experts who say that the primary failure involved power plants that use natural gas.

Over the summer, Texas’ power grid failed again due to exceptionally high summer temperatures, which was accompanied by higher-than-normal use of power for air conditioning. Mechanical problems at power plants exacerbated the problem, which led to serious rolling blackouts. The Electric Reliability Council of Texas requested that Texans conserve power as much as possible until the problems could be fixed.

Five electricity retailers have already left Texas since the catastrophic failures and Tesla may aim to help fill the gap that they left with its solar power options. Elon Musk had previously proposed that an upgrade to the Texan power grid would help prevent future problems. The proposal would naturally include Tesla’s solar power products, including batteries capable of storing solar power for use at night.

Tesla Energy Ventures could start by spinning up two backup batteries that are capable of storing hundreds of megawatts of power for use by wholesale power companies if it is approved by the Public Utility Commission. Tesla has previously sold similar batteries to Apple for use in a solar farm being constructed in California and provided batteries for use in Australia (and, yes, one of the batteries in Australia did catch on fire recently, though local firefighters were able to put it out).

Tesla is already constructing one of its backup batteries near Houston. The battery will be capable of storing 100 megawatts of energy and is already registered with the Electric Reliability Council of Texas. If the second battery is approved, it will be constructed near Austin and capable of storing 250 megawatts of power. The battery in the Austin area will be not far from the Gigafactory under construction, which will construct Tesla’s Cybertrucks when they are finally ready for prime time.