Tesla files to become electricity supplier 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 wants to sell electricity directly to Texas customers, according to a request submitted by the company this month to the Public Utility Commission there.

The app follows the start of a large battery built by Tesla in Angleton, Texas (near Houston), where it aims to connect a 100-megawatt power storage system to the grid. Texas Monthly first reported on the application, filed by a subsidiary of Tesla, wholly owned by Tesla Energy Ventures.

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

However, Tesla has not functioned as the retail electricity supplier where it establishes these systems. In contrast, large batteries manufactured by Tesla tend to help other companies in the generation, storage and consumption of energy.

A cold snatch took over Texas in February this year and left millions of people without electricity or water for days and days.

Some officials initially blamed the intermittent nature of renewable energy, even though the state runs largely on fossil fuels.

It later emerged that state legislators 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 softened the requirements to address and prevent further vulnerabilities in the Texas power grid. Following the previous blackouts, experts had called for efforts such as weather protection facilities and turbines to generate energy with adequate insulation and heaters.

The Texas grid is isolated from the rest of the United States, so power transmission from other states was not available to alleviate the cold snaps. Instead, the Texas network is managed by the Texas Electric Reliability Council or ERCOT, a nonprofit group that basically programs the flow of electricity to more than 25 million homes in Texas.

During the Texas blackout crisis, Tesla CEO Elon Musk used ERCOT on Twitter, write that the group “did not win this R.”

Musk’s name did not appear directly in the Tesla Energy Ventures app. At the head of this subsidiary, in the role of president, is Ana Stewart, Tesla’s director of regulatory credit negotiation.

As previously reported by CNBC, Musk’s solar panel and electric vehicle company has been able to fatten its margins with green credit sales over the years. For example, in the second quarter of 2020, regulatory credit sales were higher than the company’s free cash flow and amounted to four times Tesla’s net profit of $ 104 million for the quarter.

Companies that need them, including automakers, oil and gas suppliers, and retail energy suppliers, buy environmental regulatory credits to meet regulations that limit the amount of greenhouse gases they can emit each year.

According to his resume, which was part of the app, Stewart has helped Tesla earn more than $ 3.8 billion in regulatory credits since 2017.

Should it obtain approval as a retail electricity supplier in Texas, Tesla Energy Ventures will use employees from Tesla’s energy division (the same one that sells solar roofs) to generate sales and provide customer service to the state. The Tesla app also notes that it will work with Engie Energy Marketing in planning.