Tesla partners with California utility on virtual power plant

Photo by David Paul Morris/Bloomberg via Getty Images

The Powerwall owners will be paid to send extra electricity to the grid when the grid is vulnerable. The Powerwalls can help keep the lights on during emergencies and energy shortages.

When the grid is under a lot of stress, Powerwall owners will get $2 for every kilowatt-hour they feed to the grid. CAISO issues an energy alert, warning or emergency.

In July of last year, the company started a program with a few utilities, but it was a voluntary one. With a monetary incentive, the program could grow large enough to become a major backup energy source in California.

The largest distributed battery in the world could be formed by participants. Gas-fired power plants that come online to provide extra juice whenever power demand starts to overwhelm supply can be replaced by a distributed battery.

In other places, the company has experience with this. A virtual power plant has been built in Australia by the company. It would like to expand in the US. The grid operator in Texas is being pushed to change its rules to allow customers to earn money for participating in virtual power plant programs. Powerwall owners are being asked to participate in a demonstration project that will show the grid operator how a program like this could work. Without any rule changes,Tesla is giving the volunteers a gift card as a token of gratitude.

Customers who own a Powerwall can sign up for the virtual power plant through theTesla app. Push notifications will be sent when the grid needs emergency support once they're in the program. They will be able to set a backup reserve level. The battery won't be discharged below that level

After accumulating $2 for every additional kWh sent to the grid, participants will be paid byTesla on an annual basis or on a more frequent basis. It is expected that participants will be paid by the end of March.

This summer, California's grid is stressed. People use their air conditioners more during hot months. The state's hydroelectricity supply is expected to be cut in half due to the extreme weather. In order to prevent live power lines from sparking fires during hot, dry weather, Pacific Gas and Electric has implemented power outages.