Billionaire looks to expand his business despite critics who say he is too busy.
Elon Musk is a billionaire who has spent $44bn to buy , one of the largest social media companies in the world.
Now the billionaire is focusing on a more common venture: Britain’s retail energy market.
According to a job posting on LinkedIn, Tesla has plans to register with the industry regulator as an electricity provider and launch “a retail electricity product in the UK”.
The service would allow UK residents to buy stored energy and sell it to them at peak times.
Experts warn, however, that while this innovation is urgently needed, as the Government rushes to reach net zero targets in order to achieve its goals, Mr Musk will face a number of licensing rules and red tape, along with low returns, which could derail its takeoff.
Adam Bell, a strategic consultant at Stonehaven, says that it will be hard for Tesla to make any money in the next five years.
Bell served as the head of energy strategy for now-known Department for Energy Security and Net Zero until 2021.
Musk says that he would be denied a license if he only sold electricity to those who owned a Powerwall battery at home. If you are an energy provider in the UK, then you have a duty called Universal Service Obligation. You’re required to provide a tariff for anyone who requests one. “You can’t limit your offer to just a few customers,” he says.
He says that the legislation ensures that even customers with bad credit, debt and other payment problems can get gas or electric contracts.
Tesla sells both home batteries and electric cars. Powerwall batteries costing around £9500 are purchased by households with solar panels.
According to industry insiders, between 10,000 and 20.000 households have adopted them.
Tesla launched a new energy provider at the end last year in Texas. Powerwall battery-equipped homes in some areas are able to sell electricity to the grid during peak hours and then buy it back at a cheaper price.
Texas consumers have reported that they can make up to $150 (£116) a day by selling excess electricity during heatwaves.
Musk’s plan would allow households to sell excess power, such as that generated by solar panels, back to the grid.
Ofgem, a regulator of energy, has plans to allow electric cars to sell electricity to the grid. Tesla drivers will be able use this service.
As the shift to green energy continues, it becomes more difficult to ensure that there is always enough electricity.
Stonehaven’s Bell believes that the unpredictable nature of the weather, such as when the sun will shine or the wind will blow, offers a great opportunity for innovation in order to improve the supply-demand balance.
Electricity System Operators (ESOs) at National Grid are required to notify suppliers a half-hour in advance, if they estimate consumer needs too low. ESO pays consumers for adjusting their usage.
The balancing act is crucial as we bring in more renewables. Bell explains that there is more money to make in this area.
The job ad that revealed Tesla’s plans indicates it intends to go beyond setting up a virtual power plant in the UK, similar to the ones it has already established in Australia and California.
Innovative smart products would be one way to make sure that all Britons have access to electricity.
Kathryn Porter is an energy consultant with Watt-Logic. She says that this model would work like phone contracts.
She says, “It is not a completely new idea.” “In the same manner that you pay off the cost of a handset when you buy a mobile on a 2-year contract. With this, you get all your phone calls as well as everything else. “People thought we would see similar models in the energy market.”
Porter says that the red tape in the energy industry is the main reason why this idea hasn’t been implemented on a large scale.
She says, “It is a market that has extremely low margins and is overregulated.” This has deterred many players from entering the market. You used to see companies like supermarkets dabbling in the retail energy sector, but they’ve all largely left.
is responsible for the installation of smart meters. Once they reach 250,000 customers, they are also required to improve home insulation and reduce consumption.
Porter continues, “People have talked about energy as a utility for a long time but it is not delivered.” Why isn’t it being delivered?” The market is terrible. You cannot make money. “You’re burdened by a lot of regulation that has little to do with energy.
Porter says that Musk might be able find a profitable model by focusing his efforts on a small part of the market, but this would not result in significant profits.
Martin Young, of Investec, says that obtaining a license requires applicants to jump through a few hoops. He says that more innovation could be of great benefit to households.
Customers are key to the net-zero journey, and we must offer innovative products and tariffs. “This is especially true for consumers with high-load devices like EVs, heat pumps and batteries as well as solar self-generation,” he said.
Watt-Logic Porter says that Musk’s plans are aimed at consumers who own electric cars and tend to have higher incomes.
Musk’s ambitions could be hampered by his desire to accomplish too much. He announced on Wednesday, the launch of xAI a company that will compete with OpenAI’s ChatGPT.
Musk tweeted: “Announcing xAI’s formation to understand reality.”
Tesla board members criticised Musk in the past for his apparent disarray and scatterbrained attitude after his controversial and highly leveraged takeover of Twitter.
The world’s wealthiest man has a busy schedule. He is running the social media platform that now faces increased competition from Meta’s Threads.
Experts say that the use of artificial intelligence in order to optimize electricity supply and demand mismatches is still possible. Musk could find this area to be a good fit.
The first challenge is to survive on a market in which more than 30 companies have gone bankrupt since the beginning of the energy crises and in which over half are technically insolvent.