EV maker Tesla takes on role of energy supplier in the UK
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Elon Musk's Tesla is looking to make inroads into the UK energy market as an electricity supplier, The Telegraph reported, after looking at a hiring advert from the company. Tesla's entry is expected to shake up the energy industry, which has been in turmoil for the past two years.
Energy costs in the UK shot up during the pandemic due to a sharp increase in gas prices. With price caps in place on bills at the customer end, this squeezed dry energy providers, with as many as 31 going bust, per a Bloomberg report.
With price caps in place, there is little wiggle room for energy providers to offer something new to customers, and this is where Tesla's entry could make a difference. Elon Musk's company isn't really looking to build power-generating infrastructure in the country but deploy what already exists and help consumers save some money – and a lot for themselves.
Buy low, sell high
Energy prices in countries like the UK and the US are determined by demand. Energy consumption during high-demand periods is priced higher than when consumed during low demand.
Currently, in the UK, a household can sell back power to the grid if generated using solar.
However, what Tesla plans to do is buy power during low-demand hours, store it and sell it back to the grid during high demand, and pocket the difference.
One would imagine Tesla setting up its Megapacks in different parts of the country to do this, but it does not have to since the infrastructure already exists – it just needs to be distributed.
The virtual power plant
Tesla already has a presence in the UK energy market thanks to its solar roof offerings and Powerwall energy storage systems for homes. As per The Telegraph's estimates, there are between 10,000 and 20,000 Powerwall installations in the UK.
What the company now intends to do is virtually connect these Powerwalls to make a large battery pack that can be charged during low demand and can release during high demand. Each of these units works independently of the other but cumulatively can make up for the capacity of a power plant.
Since Powerwall units can perform these tasks automatically, the owner has to do virtually nothing at their end but still make some money from the net outflow of energy.
Tesla introduced a similar system in Texas last year, where the users have recorded making even more than $100 when demand prices are sky-high. Furthermore, the company is also allowing its EV customers to use the battery pack as an energy reserve and send power back to the grid during peak hours.
Tesla already has an electricity generation license in the UK and now plans to obtain a supply license from the regulator, the Office of Gas and Electricity Markets (Ofgem), the hiring advert added.
Tesla had teamed up with another electricity supplier in the UK in 2020 but ended the association in now what looks like a move to launch its own product.
The portfolio of offerings from Tesla just went up.
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