Tesla is operating a virtual power plant demonstration in Texas

Tesla is operating a virtual power plant demonstration in Texas to show the grid authorities the potential of such a product.

But until some rule changes, the company needs the collaboration of local Powerwall owners without compensation.

Last month, we reported on Tesla lobbying for any homeowner with solar and batteries to participate in Texas’s energy market.

The company was asking for a rule change with the Electric Reliability Council of Texas (ERCOT), an organization operating Texas’s electrical grid, that would enable electric utilities with customers with behind-the-meter solar and batteries, meaning people with residential solar, to bid on the extra capacity.

At the time, we speculated that Tesla could be seeking the rule change to enable a virtual power plant with its Powerwall customers in the state.

Sure enough, Tesla has now launched a virtual power plant demonstration in Texas in order to demonstrate to ERCOT the value that VPPs can bring to the grid.

Tesla wrote about the project:

Your Tesla Powerwall is capable of providing powerful support to the grid. Currently, however, homes in Texas are not allowed to provide some of the critical grid-supporting services that are typically provided by conventional power plants. Allowing Powerwall’s clean energy to provide these services is important to creating a more resilient grid and accelerating the world’s transition to sustainable energy.

The company says it has about 200 Powerwall owners in the ERCOT “North” sector in Texas that can choose to opt in the program as volunteers:

People participating in the demonstration have to agree to let Tesla control 80% of the capacity of their Powerwalls:

You agree to allow Tesla to control your Powerwall, including charging, discharging and configuring your Powerwall to automatically respond to grid conditions, to support tests that demonstrate grid services. Tesla will not draw down the battery below 20% of its capacity, to allow for backup. Except for this limitation, Tesla may charge or discharge your Powerwall at any time and to any extent.

Tesla is bundling that capacity with a “fleet of Powerwalls” to provide grid services.

However, until the rule change and since this is a demonstration to justify the rule change, no one is being compensated for those grid services.

For now, Tesla is only offering a $40 gift cards to those participating:

If you participate in 80% or more of the tests during the term and provide market ID data if requested, Tesla will mail you a $40 Tesla gift card for your participation. This is the sole compensation for participation and for costs incurred related to your participation, including any increased energy charges.

Tesla says that it already has 64 Powerwall owners in the VPP demonstration and the early results are promising:

Now if ERCOT adopts the rule change, those same Powerwall owners could start participating in Texas’s energy market through the Tesla VPP and get fairly compensated for those grid services.

It would unlock more value in home energy storage, and therefore, it would reduce the payback period of home battery packs like the Powerwall while helping stabilize the Texas electric grid.

Tesla is aiming for a rule change by the end of the year.