Inside Elon Musk’s plan to turn Britain into a ‘virtual power grid’

A billionaire sets his sights on another business endeavor despite facing criticism for already being involved in numerous ventures.

Elon Musk has made efforts to propel rockets into the vastness of space, devised strategies to encompass the heavens with internet connectivity via satellites, and invested a staggering $44 billion in acquiring one of the largest social media corporations globally.

Now, the billionaire is targeting a completely regular endeavor; Britain's retail energy market.

A recently shared employment advertisement on LinkedIn has disclosed Tesla's intention to register as an electricity supplier with the governing body of the industry. Moreover, the renowned company aims to introduce a "retail electricity offering" in the United Kingdom.

The blog section can be rewritten as follows using alternative words: The company's Powerwall home battery users may have the opportunity to access this service, offering the purchase of electricity to households in the UK, while also allowing the option to sell back stored energy during periods of high demand.

However, specialists caution that although this kind of advancement is crucially required as the Government hurries to achieve net zero goals, Mr. Musk confronts a multitude of licensing regulations, bureaucratic obstacles, and inadequate profits that could impede its success.

According to Adam Bell, an expert in strategic consulting at Stonehaven, Tesla will face challenges in generating profits in the next five years.

Prior to 2021, Bell held the position of energy strategy leader for the current Department for Energy Security and Net Zero.

According to him, it is highly important to note that Musk would face obstacles in obtaining a permit if his intention is solely to provide electricity exclusively to those who possess a Powerwall home battery.

"If you work for an energy provider in the United Kingdom, you are bound by the Universal Service Obligation. This involves the requirement to provide a tariff option to anyone who expresses interest. You cannot restrict your offerings to a select few customers," he explains.

The law guarantees that individuals facing debt, unfavorable credit scores, and similar payment difficulties are still eligible for contracts to avail gas or electricity services, he further explains.

Tesla, known as the biggest manufacturer of electric vehicles globally, not only specializes in cars but also offers home batteries for sale. Customers who have installed solar panels in their homes are among the group that invests in Powerwall batteries, which come with an installation price of approximately £9,500.

According to experts in the field, approximately 10,000 to 20,000 households have embraced their usage.

Last year, Tesla introduced an energy supplier in Texas that enables homes equipped with Powerwall batteries in specific regions to sell excess electricity to the power network during high-demand periods and purchase it back at lower rates.

Texan residents have indicated that they can earn up to $150 (£116) per day by selling excess electricity during scorching hot periods.

According to Musk's proposals, households will have the opportunity to vend any excess energy they generate, such as from their solar panels, to the power grid.

The energy watchdog, Ofgem, intends to ultimately permit electric cars to trade surplus electricity back to the network as well. Consequently, individuals who drive Teslas will also have access to this opportunity.

Managing the sufficient supply of electricity at the right times proves to be a challenging task, especially with the ongoing transition towards sustainable energy sources.

According to Bell from Stonehaven, the fact that we can't predict when the sun will shine or the wind will blow creates an opportunity for creativity and advancements in finding a better equilibrium between the amount of energy supplied and the amount demanded.

Suppliers have the responsibility to notify the Electricity System Operator (ESO) of National Grid when they anticipate that consumer demands will be insufficient. In response, the ESO intervenes by compensating consumers who modify their energy usage.

"The act of finding a balance has been of utmost significance due to the increasing integration of renewable resources into our system. Consequently, there is a greater potential for financial gains in this area," states Bell.

However, the employment advertisement that unveiled Tesla's intentions indicates that it intends to expand its operations beyond just establishing a virtual power plant, much like the ones it has already inaugurated in Australia and California.

One approach to guaranteeing the provision of electricity to every individual in Britain could be by implementing creative intelligent merchandise.

According to Kathryn Porter, an energy consultant at Watt-Logic, this particular model would be comparable to the way phone agreements function.

"It's not completely a novel concept," she states. "Similar to how you gradually repay the expense of a smartphone over a two-year contract while also receiving the benefits of phone calls and other features included in the package, there were discussions about the possibility of incorporating comparable models in the energy industry."

However, Porter explains that the main obstacle preventing the widespread adoption of this concept in the energy sector is primarily due to the industry being burdened with excessive bureaucratic procedures.

"It's a highly regulated industry with incredibly narrow profit margins," she explains. "This has greatly dissuaded these kinds of participants from entering. Previously, we witnessed supermarkets cautiously entering the retail energy sector, but now, virtually all of them have withdrawn."

Energy companies have the task of setting up intelligent meters. Additionally, when they exceed 250,000 clients, they are also obligated to aid in the enhancement of household insulation and minimizing energy consumption.

"Energy as a service has been a topic of discussion for a considerable time, but it has yet to be implemented," Porter states. "Why hasn't it been implemented? Well, the market conditions are abysmal. It's hardly profitable. Moreover, the industry is heavily regulated, with rules that aren't necessarily directly related to energy."

Porter suggests that Musk could potentially discover a sustainable model by targeting a specific segment of the market; however, this approach would unlikely result in substantial financial gains.

According to Martin Young from Investec, acquiring a license involves going through several obstacles. However, Young believes that the household sector could greatly profit from increased creativity in the industry.

"Our journey towards achieving a state of net-zero heavily relies on customers, and it is crucial for us to provide them with creative product and pricing options. This holds particularly true for individuals who possess high-load appliances like electric vehicle batteries and heat pumps, along with the ability to generate their own power through solar energy," he explains.

According to Watt-Logic's Porter, an additional advantage for Musk is that his intentions are specifically aimed towards affluent individuals who already possess electric cars.

However, Musk's aspirations may be hindered by his inclination to take on too many projects. Just recently, he unveiled his latest venture, xAI, a company focused on artificial intelligence, with the goal of disrupting OpenAI's ChatGPT's market dominance.

Musk took to Twitter to declare the establishment of xAI with the aim of comprehending the true nature of existence.

The Tesla board members have previously voiced their concerns about Musk's perceived lack of focus and disorganized approach following his heavily-indebted and contentious acquisition of Twitter.

With the responsibility of managing the social media platform, which is now encountering increased rivalry from Meta's Threads, organizing space expeditions, and pursuing numerous other projects, the wealthiest individual in the world is undoubtedly engrossed in numerous activities.

However, experts claim that there is still a possibility to utilize artificial intelligence in order to effectively manage and address the imbalances between electricity supply and demand. This particular field could be well-suited to Musk's capabilities.

The initial obstacle will be to endure in a market where over 30 suppliers have gone out of business since the energy crisis began, and where more than half of the companies are financially insolvent.