If the plan wins regulatory approval, it’s one more step toward chief executive Elon Musk’s stated goal of making Tesla more than a car company.
Musk has told investors he expects the company’s energy business to one day rival its auto manufacturing, according to Bloomberg News. Tesla sold 201,250 electric vehicles in the quarter that ended June 30, for a total of $10.2 billion in revenue.
He has engineered several major moves to broaden its clean energy horizons, including the purchase of financially strapped solar panel provider Solar City in 2016. In his efforts to persuade skeptical investors, Musk contends there is an integral link between the company’s battery storage expertise and solar energy, noting that both are needed for a more sustainable future.
Details of the Texas project are scant and the company did not respond to a request for comment from The Washington Post, making it hard to determine exactly how Tesla’s new venture will set itself apart from the roughly 120 companies that sell electricity across the state. According to Texas Monthly, which cited unnamed people familiar with the company strategy, Tesla had planned to enter the state’s power market even sooner, before the widespread blackouts that kneecapped the state’s utilities in February.
The magazine also suggested Tesla might be equipped to let individual Texans with solar panels earn money by sharing their excess power with the grid, an arrangement that exists in some other states.
It is also possible that the company could support the considerable energy needs of Musk’s other business interests in the state. Tesla is already building a large-scale “Gigafactory” near Austin. And SpaceX, the commercial spaceflight company he founded in 2002, has a launch facility in Brownsville on the state’s southernmost tip.
Musk himself moved to Texas last year, triggering a wave of speculation over the enigmatic businessman’s competing allegiances to his various companies.
For Texas, any significant expansion by Tesla could help diversify the state’s energy mix, which is dominated by oil and gas. Its economy, politics, and cultural cachet have long been intertwined with oil, although it also home to growing tech sectors in Austin and elsewhere. Renewable energy, such as wind and solar, account for a little more than a quarter of the state’s overall power consumption, according to the U.S. Energy Information Administration.
The limitations of the state’s light-touch regulatory environment were put on display this year when a cold snap knocked out power for weeks across the state. The failure to winterize by many of the state’s leading power utilities, which critics say is aided by a system that gives them no incentive to do so, left the normally warm and arid state unprepared for diving temperatures. And the unique independence that defines Texas’s grid ― unlike other states, it is cut off from the national grid ― left it without a backstop.
All told, the crisis cost the state’s economy an estimated $80 billion to $130 billion from widespread damage to homes and businesses, lost economic activity and a contaminated water supply, according to the Dallas Federal Reserve. At least 111 lives were lost.
Musk himself knocked the Electric Reliability Council of Texas, or ERCOT — which operates the electric grid and manages the deregulated market for much of the state — as the crisis set in.
“@ERCOT_ISO is not earning that R,” he tweeted Feb. 17.
Tesla’s revenue skyrocketed last year during a wave of pandemic-induced car-buying, growing 28 percent to $31.5 billion. The company’s shares added about 1.5 percent Friday, hovering at $712 per share.