Elon Musk Is Officially in the Texas Electricity Business

Elon Musk Is Officially in the Texas Electricity Business
Who wants electricity? (Photo: Britta Pedersen/Pool, AP)

Noted tax-lover Elon Musk is the latest entrant in Texas’ Wild West energy market. The CEO of SpaceX and Tesla is now officially licensed to sell electricity to retail customers in the state through a company called Tesla Energy Ventures.

Musk filed paperwork to operate in the state over the summer, a move first noticed by Texas Monthly. Late last week, the state gave its blessing to Musk’s venture. Texas’s Public Utility Commission wrote in its finding that Tesla Energy Ventures is now licensed to “provide retail electric services throughout the area served by ERCOT,” which is basically all of Texas.

The full details of the new company are still a bit of a mystery. But the plan appears to be to target existing Tesla customers to start. Tesla sells solar panels, batteries, and cars that can act as batteries. Together, these components could essentially be a virtual power plant.

Tesla has experience on that front; the company has a virtual power plant up and running in the state of South Australia and a beta version that launched in California this summer. How fast a Texas version of this — or something else altogether with existing customers in the state — expands is unclear. Energy firm Wood Mackenzie wrote at the time it was announced that it expects “less than 5%” of the state’s existing 50,000 Powerwall owners to participate, which it said would “not have a meaningful impact on grid operations in California.”

Those numbers might not move the needle in the near term, but Musk has said he sees energy being a huge part of Tesla’s future. “I think long-term, Tesla Energy will be roughly the same size as Tesla Automotive,” he told investors last year, speaking of the company’s energy side that’s different from the Texas venture. “The energy business is collectively bigger than the automotive business.” And the company could fill a unique niche in Texas.

“Usually an electricity service provider that doesn’t have generation on the ground essentially acts as a middleman, they buy on the wholesale market and turn around and sell to customers,” Ted Kury, director of energy studies for the Public Utility Research Centre (PURC) at the University of Florida, told UtilityDive at the time of the Tesla filing. “Tesla would have the ability to act as a buyer and seller simultaneously and have access to a lot of data. Regulators are going to have to think about what the implications might be.”

Indeed, Musk will now be able to sell power to the people in Texas at a time when the state’s grid and its reliability have come under scrutiny after deadly blackouts. The main driver of those blackouts was, despite Republican claims otherwise, natural gas infrastructure freezing up and failing to meet demand. A Tesla virtual power plant could help keep the lights on. At least some Tesla customers actually did rely on their cars to keep warm.

Say what you will about the billionaire jostling his way into major markets that include cars, tunnels with cars, energy, the internet, and space ( is there anything else left?), but the Texas grid is hardly the paragon of public goods. “Tire fire” would be a generous descriptor after watching the grid go down in February and almost went down this summer (twice). Meanwhile, the folks that oversee Texas oil and gas that played a key role in the grid’s February collapse have largely evaded scrutiny or oversight. I could literally write a whole other story about how poorly run the grid is. Now, I’m not saying a meme-loving billionaire will singlehandedly fix Texas energy (he won’t) or that there aren’t better solutions out there (there are). But it’s not like the immediate alternative is much better.