Thursday Dec 08, 2022

What Investors Miss About Tesla Energy – Motley Fool


For electric vehicle maker and renewable energy stalwart Tesla (NASDAQ:TSLA), batteries are a lousy way to make money. Lots of companies compete to make them cheaply, keeping batteries’ profit margins low. To cash in on them, Tesla needs to add brains to batteries’ brawn – and luckily for Tesla, its Autonomous Control software does exactly that. 

When paired with renewables and storage, Tesla’s software holds the power to disrupt the U.S.’s roughly $400 billion electric utility market and create a new era of abundant energy, distributed power, and virtual power plants – a massive opportunity that too many investors are completely overlooking. 

How energy storage software works

The US grid suffers from polluting power plants, wasted electricity, and blackouts. It must also maintain a delicate balance-constantly predicting the exact power supply and demand. Solar and wind cannot solve these problems alone; these sources produce the most energy at a time with relatively low demand. But adding energy storage solves this intermittency problem, adds an extra margin of safety against blackouts, and reduces the grid’s carbon footprint. 

With Tesla’s control software, battery owners can buy or sell energy to one another in real-time, switching between using battery power, on-site generation, and grid power at the drop of a hat. One part of the software suite, Autobidder, helps utilities and homeowners use the cheapest, most efficient power source at any given time. Autobidder learns when to draw on power stored in batteries for customers’ own use, and when to sell that stored power to others for maximum profit. Powered by machine learning, this software continuously improves its ability to forecast electricity prices as it gathers data from different geographies and regulatory environments. 


Why Tesla is winning

Tesla’s smart energy storage software leads the industry because it has the broadest reach, ties in with Tesla’s full suite of energy products, and has amassed a track record of strong performance. Autobidder runs on over 1.2 gigawatt-hours (GWh) of Tesla’s commercial storage – enough to light up over 100 million LED bulbs.This vast storage network ensures that Tesla collects a mountain of diverse, valuable data to improve its software’s performance. As in the race for autonomous driving software, the business with the best data wins. 

Tesla’s size and willingness to handle tasks in-house allow it to run software on its own servers while rival products rely on third parties to provide computing power and web hosting. Tesla handles everything from programming software to building solar roof tiles itself. By taking on these tasks, Tesla should be able to cut costs, make Autobidder price competitive, and keep control over the entire user experience. And by making many of the batteries that Autobidder runs on – Megapacks and Powerwalls – Tesla Energy may have another opportunity ahead. Right now, Autobidder works with most battery packs. But Tesla could tweak the software to get better performance out of its own battery products, driving customers who are already using Autobidder to invest in Tesla’s batteries, too. 

The Hornsdale Power Reserve (HPR) in Australia is a testament to Autobidder’s success; no other software can boast results this impressive and on such a large scale. The HPR is the largest lithium-ion battery in the world, and Tesla’s Autobidder has allowed it to save customers $116 million in 2019.The giant battery has intervened during blackouts or coal shortages, providing affordable energy and stabilizing Australia’s grid. In Vermont, Green Mountain …….


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