Texas Virtual Power Plant

It looks like Texas is the next place to get a Virtual Power Plant, as news came in on December 9th that the company had received approval to create a “statewide market design pilot” for the area.

This pilot will likely be similar to the one run in California and Japan last year - with Tesla Powerwall users able to opt in to a system that will allow them to help stabilise the larger grid with their own power generation - in exchange for some compensation.

But from the sounds of things, it wasn’t easy to get this chance to prove a VPP would work in Texas.

Texas’ power grid is an open market - dozens of power companies compete in the state for customers. The grid itself is completely independent of the rest of the country - and that plus the deregulated grid makes it a little difficult for a newer company to squeeze into that market.

Luckily, Tesla had a lobbying team in Texas to help get their plan authorised - likely taking advantage of the disastrous power grid failures in 2021 to make the point that a more cohesive system would help in extreme weather events.

Some of you might remember the winter storm in 2021 that completely overwhelmed Texas’ power grid - which mostly runs on natural gas plants. A lot of those competing companies hadn’t planned for a grid overload in the typically calm Texan winters, and many people were without power for days in some of the coldest weather they had experienced.

So leaning on the uncertainty that the 2021 debacle put on the Texas grid, Tesla’s lobbying team got their foot in the door - and got approval to run a demo VPP using 200 participants back in June 2022 - which is reportedly what finally got them their authorization to expand to the rest of the state.

Tesla’s virtual power plants in places like Australia, California, and Japan, have already proven to be very robust in extreme weather. The ability for individual users to band together and share power is a very strong tool that legacy power grids just can’t do.

And some users have already found that the payments from sharing energy during peak events can end up paying enough to cover the monthly cost of the system. That’s definitely better than what Texas has to work with right now.

Back in 2021, a user in California’s VPP - Mark Gillund - was able to cover his bill during September of that year due to a serious heatwave putting stress on the grid. Extreme weather is something Virtual Power Plants are basically tailor-made to deal with.

Considering Tesla has had great success with these systems in other places, it’s hard to think they won’t find success in Texas. And given how badly their current energy grid handles emergencies, it’s likely Texans are looking for a more community-based alternative to keep their homes at the right temperature.