Tesla is working with a Californian energy supplier on a virtual power plant

Tesla is working with a Californian energy supplier on a virtual power plant

Tesla and California utility PG&E have launched a new program that pays eligible Powerwall owners to send extra power to the grid when it’s prone to blackouts. Together, the Powerwalls form a “virtual power plant” that can help keep the lights on during emergencies or when there is a power shortage.

By signing up, Powerwall owners will earn $2 for every additional kilowatt-hour they feed into the grid during certain “events” when the grid is under heavy load. This includes each time California grid operator CAISO issues an energy alert, warning or emergency.

Tesla launched a similar beta program with PG&E and a few other utilities last July, but that was a voluntary program with no payouts. With a monetary incentive to attract participants, the program could now grow large enough to become a significant backup energy source in California — and a clean one at that.

The participants would, according to Tesla, “help form the largest distributed battery in the world – potentially over 50,000 powerwalls.” This distributed battery — or in other words, a virtual power plant — can replace gas-fired power plants, which typically come online to provide extra juice when power demand begins to outstrip supply.

Tesla already has experience with this in other places. The company has built a virtual power plant in Australia in recent years. And it wants to expand further into the US. Tesla is urging the Texas grid operator to change rules that would allow its customers to earn money for participating in a virtual power plant program. The company launched a demonstration project earlier this year, inviting Powerwall owners to volunteer to show the network operator how such a program could work. For now, with no rule changes, Tesla is offering volunteers a $40 Tesla gift card “as a token of appreciation.”

In California, PG&E customers who own a Powerwall can sign up through the Tesla app to join the virtual powerhouse. Once they’re part of the program, dubbed the Emergency Load Reduction Program, they’ll receive push notifications ahead of events when the grid needs emergency support. To keep some backup power for yourself, you can set a “backup reserve level”. Tesla will not discharge the battery below this level.

After earning $2 for each additional kWh sent to the grid, participants will receive payments from Tesla “on an annual basis or more frequently as Tesla determines.” According to Tesla, participants can expect a payout for this season by the end of March 2023.

California’s power grid is particularly busy this summer. Energy demands typically increase during hot months when people turn up their air conditioners. To make matters worse, an extreme drought is expected to cut the state’s hydroelectric supply in half this season. Hot, dry weather also increases the risk of wildfires, which is why PG&E has made a habit of implementing pre-emptive power outages to prevent live power lines from igniting fires.

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