Tesla, the company best known for its electric cars but which also runs a battery technology business, has applied to UK energy regulator Ofgem for an electricity generation license. But the technology company is not planning on building power plants in the UK. Instead, its plan is to use technology it has developed to create a ‘virtual power plant’ by networking thousands of small domestic batteries across the country.
The U.S. tech company, most recently in the news as a result of CEO and co-founder Elon Musk tweeting that he felt Tesla’s shares were overvalued, has created a tech platform called Autobidder. The platform allows it to control thousands of the kind of household battery packs that charge from renewable power sources such as solar panels or the kind of small wind turbines some landowners have on their private property.
Tesla’s Autobidder platform aggregates and trades the energy held in these batteries, which combine to provide meaningful amounts of electricity that can be fed into the National Grid. The batteries themselves collect power generated from renewable electricity generators like the solar panels many homes have installed on their roofs. But that power can then be discharged into the grid. Tesla would take a share of revenues generated, as would the battery owners. The platform could be described as the Uber or Airbnb of power generation.
A license from Ofgem would be required for Tesla to trade the energy its platform would aggregate. But it would also give Tesla the option of also building and trading electricity from industrial-scale battery storage facilities.
Tesla sells household battery packs, which cost upwards of £6000 each in the UK, under its ‘Powerwall’ brand. Households use them to save any surplus electricity generated from solar panels or other renewable sources they might have. They can then use that later to further reduce their power bills. The company also produces industrial-scale batteries called ‘Powerpacks’. Tesla holds the record for the biggest lithium-ion battery ever, built in Australia in 2017.
Battery technology is key to the move towards clean, renewable energy sources contributing a greater share to the overall power mix. Renewables can, when conditions are right, provide energy at cost parity, or better, compared to fossil fuels. But the problem is the sun is not always shining or the wind blowing. Batteries able to store excess energy generated from renewable sources during optimal conditions, discharging it when not enough is being generated, can go a long way to solving that problem.
Last week the National Grid warned of a risk to the UK’s power supply resulting from low demand seeing the electricity grid overwhelmed by surplus energy being generated from renewables that can’t be turned on and off when demand is low. As a result, it has applied to Ofgem for the right to disconnect power generation. Batteries being able to absorb excess supply and then discharge it when needed would also help resolve the issue more efficiently than disconnecting power plants.
National Grid also believes there is future potential for the batteries of electric vehicles to be aggregated in a similar way. Tesla’s electric cars don’t currently support ‘vehicle-to-grid’ technology but Mr Musk has already commented on the potential for it to move in that direction.