Tesla to Build Virtual Power Plant in California

Tesla has announced plans to build a virtual power plant using the Powerwall battery, which could help address issues with the Californian power grid. Californian power grid operators have already called for residents to conserve power as much as possible in the evening in order to address expected heavy loads on the grid.

California refers to this request as a “Flex Alert,” in which it asked residents to limit their use of appliances like the washer and dryer or charge their electric vehicles between the hours of 4pm and 9pm. This could cause some issues for residents who own Tesla vehicles, who might wish to plug their vehicles in when they get home so that they don’t forget to charge it overnight.

The Californian power grid’s problems are being exacerbated by record high temperatures that come with increased use of air conditioning and a drought that is affecting its hydropower plants’ ability to operate. In the past, similar events have caused issues like rolling blackouts for Californians.

The Californian power production industry has faced increased regulatory pressure to invest heavily in “clean” power sources like solar and electric and California also offers tax breaks and incentives for consumers who purchase electric vehicles. Companies investing in clean power in California can be as far-ranging as Apple’s purchase of 85 Tesla Megapacks for a solar power farm in the state. Even with the high level of investment, though, California is not quite ready to rely purely on renewable energy due to its high population and currently high summer temperatures.

The state may have anticipated Tesla’s desire to help with its Powerwall-based virtual power plant concept in a public statement, saying, “As California’s ability to store solar and wind energy with batteries or other technology continues to improve, those crucial evening hours will be less of a challenge and similar emergencies rarer. But for now, collective action to conserve is our most effective way to keep the grid stable.”

Tesla is already working with the Australian government on a similar initiative, which aims to reduce electricity rates. Phase 3 of the initiative, which is centered in South Australia, aimed to connect a total of 4,000 homes to the virtual power plant using Powerwalls and solar panels.

Tesla’s batteries already demonstrated its ability to help the Australian grid survive a negative event when a coal-fired power plant exploded in May 2021, knocking out power for 470,000 customers in the Queensland area. A Tesla Powerpack battery farm called the Hornsdale Power Reserve stepped in with its 150MW/194MWh system in less than two seconds. The event may have contributed to Tesla’s criticism of what it describes as the potential of “disorderly coal plant exits” in a letter to Australia’s Energy Security Board (ESB).

Tesla’s plans for establishing a virtual power plant in California includes the establishment of a net metering credit for sending energy stored in the Powerwall to the grid during peak hours. This would help stabilize California’s power grid and, if the virtual power plant scales to a high enough level, reduce California’s need to increase power production at inefficient and “dirty” power plants like coal-powered ones. If Powerwall owners agree to join the virtual power plant, their Powerwall’s charge won’t ever fall below the power stored in the backup reserve.

Tesla aims to open enrollment for the Californian virtual power plant in the app on July 22.