Tesla pooled California Powerwall homes into PG&E's commercial-only demand program

Ars Technica reported in June 2022 that Tesla had announced a 'virtual power plant' program for California owners of its home batteries. Despite the image of Powerwalls pushing power into the grid, the batteries would instead take part in PG&E's Emergency Load Reduction Program, designed to reduce demand: the battery supplies some of the owner's house demand during events. The program was otherwise intended for commercial organizations that can aggregate changes to cut demand by a kilowatt.

Powerwall owners sign up through the battery software and set a minimum reserve the software will not go below. The program guarantees at least 20 hours of events; owners can opt out of an event, suspend or drop out at any time. Charging from PG&E's grid generally costs under $0.50 per kWh, and for each kWh a battery takes off the system during events, participants are paid $2.

The price gap makes sense for the utility: at moments of emergency, PG&E is forced to pay for the most expensive generators, which may cost more than $2 per kWh and tend to be the least efficient and most polluting. Ars reads Tesla as pooling many homes, none able to reach the threshold alone, into what looks like a single large facility, and noted that Tesla appeared to pass all of PG&E's payment to owners without taking a fee.

Peak-hour power is bought from the priciest generators, so a $2 payment can still be a bargain for the utility.

Home batteries can cut a home's draw from the grid without shipping power out.

Pooling clears the program's minimum size that no single home could meet.

Passing on the whole payment gives owners a strong reason to join.

When a rule is sized for big players, a pooling layer can let small ones in, and the margin between prices pays for it.

Ars noted that Tesla might have negotiated a variant of the PG&E agreement and said it had asked the company; the report gave no enrollment or payout figures. The plan was open to any PG&E customers not in a similar program.