FOCUS-Tesla tests the circuits for German energy market push

*Tesla joins western European power trading exchange. Musk’s Tesla has recently acquired a licence that will enable the carmaker to trade electricity across western Europe and the company has also been surveying customers in Germany about potentially using Tesla electricity in their cars. Generating and trading power could help Tesla lower the running…

* Tesla joins western European power trading exchange

* Surveys German customers on potential energy services

* Brandenburg plant chosen with energy push in mind – source

By Vera Eckert, Christoph Steitz, Tom Käckenhoff and EdwardTaylor

FRANKFURT, Sept 2 (Reuters) – Elon Musk appears to beopening a new front in the European battle for electric carsupremacy: the power behind the wheel.

Musk’s Tesla has recently acquired a licence thatwill enable the carmaker to trade electricity across westernEurope and the company has also been surveying customers inGermany about potentially using Tesla electricity in their cars.

Such moves, consultants and energy industry executives say,could set the stage for the company – possibly with one or morepartners – to take on established utilities in Germany, Europe’sbiggest power market and autos heartland.

Tesla declined to comment about its energy market plans.

Generating and trading power could help Tesla lower therunning costs of its cars at a time rival automakers, includingGermany’s BMW, Audi, Porsche andMercedes, are churning out new electric models.

It could also step up competition to utilities such asVattenfall and EnBW, which are investing inelectric mobility services too, but which like peers RWEand E.ON are lumbered with the cost ofwinding down fossil fuel and nuclear power plants.

Tesla already sells solar panels and the Powerwall batterystorage system for homes, but now appears to be looking atselling electricity directly to customers and using the homestorage systems to provide services to the grid.

In June, the company became a member of the Paris-based EPEXSpot power exchange, a platform used to trade much of westernEurope’s intraday cross-border electricity.

A month later, it surveyed German customers about theirinterest in energy services.

“What would encourage you to switch from your existingenergy supplier?”, the survey said, according to a copy seen byReuters.

“Would you buy a Tesla photovoltaic system and home storage(Tesla Powerwall) if you could switch to a specially designedTesla electricity tariff?”, it added.

Tesla also asked potential energy customers whether theywould allow the company to control when cars would charge.

This could allow it to coincide charging with cheapelectricity rates during off peak hours, consultants andindustry executives said.

It could also open the way for Tesla to use power stored bycustomers to help balance the electricity grid, an increasinglyimportant service in Germany as it becomes ever more dependenton volatile wind and solar power.

Companies offering similar services in Germany includeShell-owned sonnen, virtual power plant operator NextKraftwerke, and power aggregator Lichtblick.

RENEWABLE ENERGY

Tesla’s interest in renewable energy was one of the factorsthat led it to choose Brandenburg state around Berlin as thesite for a new factory, a person familiar with the company’sdeliberations told Reuters.

In the first half of this year, some 65% of the electricityon the Brandenburg grid was generated from renewable sources,mostly wind. But like other areas in the north of the country,it often wastes energy because Germany’s networks are limited inhow much green power they can transport over long distances.

Tesla’s Gigafactory 4 in Brandenburg will on its own require100 megawatts (MW) of power and up to 400 MW if battery cellproduction is also launched, according to transmission gridoperator 50Hertz.

Tesla is a long way from building up enough battery assetsto deliver frequency regulation at grid scale, say specialistssuch as utility Axpo. But the company has made several steps toexpand its energy activities in recent months.

In May, it applied for a UK licence to supply power,according to the Telegraph newspaper. It also uses a platform tobring users of its solar and Powerwall battery system into theelectricity market in Australia.

“The next and obvious step for Tesla is to get intoproduction, especially of renewable power,” said consultantBerthold Hannes, who has 30 years of energy advisory experience.

“Tesla could use its own locations, for example the roofs ofplants or the sites of charging points, and alternatively, or inaddition, it could take stakes in solar plants or wind parks,”he said.

Germany pioneered the solar power market, and is in theprocess of laying a policy framework that will make it easierfor decentralised power generation and supply.

“Tesla’s long-term plan definitely includes tackling theenergy industry in a bigger way, though it’s questionablewhether it invests enough at the moment in that area,” said aformer member of Tesla management, who declined to be named.

Thomas Deser, a portfolio manager at Union Investment, saidit was unlikely Tesla would enter the German electricitydistribution business on its own – “but it could do so with acompetent partner from the energy industry.”(Reporting by Vera Eckert, Christoph Steitz, Tom Kaeckenhoffand Edward TaylorWriting by Edward TaylorEditing by Carmel Crimmins and Mark Potter)

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