Tesla's Virtual Power Plant Event Shows The Future of The Electric Grid

Not only does Tesla Inc TSLA make the best-selling electric cars on the planet, but the company also produces solar panels and home backup battery packs called Powerwall. Homeowners with solar and Powerwall can collect energy from the sun, and then store it in the big Powerwall battery to power their house at night or in the event of a grid outage.

Now, Powerwall has another use case, even when the grid is operational.

What Happened: As covered by Electrek, Tesla has been trying out a program in which a virtual power plant (VPP) consists of distributed energy storage systems, such as Tesla Powerwalls.

Last year, Tesla launched this VPP pilot program in California, for which Powerwall owners would join in voluntarily without compensation to let the VPP pull power from their battery packs when the grid needed it.

This week, Tesla had its first emergency response event. Tesla asked permission from volunteer homeowners to use their thousands of Powerwall battery packs to simulate one power plant to provide energy to the grid at a time of high demand. The use of these batteries in unison lowered the need for peaker plants, which are usually powered by coal or natural gas and are high producers of pollution.

Unlike before, participants in the event will receive $2 per kWh of energy contributed, far above the rate the owner pays to use electricity. It is estimated that participants will get between $10 and $60 per event.

Tesla contacted owners before the emergency response event to allow them to opt-out, in case they needed the energy from their Powerwalls for themselves. After agreeing, Powerwall owners didn't need to do anything, as the backup procedure is automatically handled. Owners can also limit how low their Powerwall is allowed to discharge during an event such as this. 

Photo: Courtesy of Tesla