Tesla announced it paid Powerwall owners $9.9 million through its virtual power plant programs in 2024.
Distributed energy is working.
A virtual power plant (VPP) consists of distributed energy storage systems, like Tesla Powerwalls, used in concert to provide grid services and avoid the use of polluting and expensive peaker power plants.
Peaker plants are fossil fuel-powered power plants that are activated in peak energy usage times to ensure the grid has enough power to supply the demand and avoid brownouts.
It is a fairly new technology that aims to decentralize the grid, helping make it more secure and stable while reducing costs.
Tesla has been an early adopter of the technology through the deployment of its Powerwall, a popular home battery pack.
In areas with high penetration of the home battery, Tesla can make a deal with the local electric utility to pull power from the Powerwalls in customer homes when needed, and those homeowners get compensated at an attractive rate.
Today, Tesla announced that it paid Powerwall owners nearly $10 million through VPPs in 2024:
We paid out $9.9M to Powerwall owners who supported the grid through Virtual Power Plant participation in 2024.
Tesla’s first VPP launched in Australia in 2019. The company first aimed for 50,000 homes, but we learned that it is at about 7,000 homes and 35 MW as of the end of last year when Tesla was looking to sell the virtual power plant.
In 2021, Tesla launched a VPP pilot program in California, in which Powerwall owners would voluntarily and without compensation let the VPP pull power from their battery packs when the grid needed it.
It helped Tesla prove the usefulness of such a system.
Following the pilot program, Tesla and PG&E, the electric utility covering Northern California, launched the first official virtual power plant through the Tesla app.
This new version of the Tesla Virtual Power Plant actually compensates Powerwall owners $2 per kWh that they contribute to the grid during emergency load reduction events. Homeowners are expected to get between $10 and $60 per event.
Later, we reported that Tesla’s California VPP expanded to Southern California Edison (SCE) to now cover most of the state.
Last year, Tesla’s California VPPs reached over 100 MW in capacity, and the company also started building significant VPPs in Texas.
Some Powerwall owners are now reporting making hundreds of dollars per year per Powerwall through Tesla’s virtual power plant.
Electrek’s Take
This is awesome. I love distributed energy. VPPs not only make home energy storage more financially viable, but they also often mean that fossil fuel-powered peaker plants are being replaced by solar power and energy storage, as most Powerwalls and other home battery packs are linked to home solar power.
It’s not super popular yet because it requires the cooperation of the electric utilities and the regulators, but it appears to be viable in most places.
If you have home solar and energy storage, or looking to add solar and energy storage at home, it’s worth looking into.
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