Tesla's Autobidder Platform Is One Example of a New Energy Future

In April 2020, Tesla submitted an application to Ofgem’s Gas and Electricity Market Authority to become an electricity supplier in the UK. Tesla’s move positions the company to capitalize on the changing energy landscape. Tesla manufactures a wide range of hardware and distributed energy resources (DER) from EVs and battery packs (residential and utility-scale) to solar roofs. Becoming a utility is the next step to derive value from this hardware. A key component of Tesla’s strategy is its recently announced Autobidder product—an analytics platform that enables its various DER to autonomously interact with electricity markets to provide power and services.

Autobidder Unlocks Distributed Value and Reduces System Costs

Autobidder is a transactive energy platform that uses machine learning, predictive analytics, and automated interactions with market operators and regulators to generate revenue from power and energy services with minimal overhead. The combination of DER and automated platforms produces benefits for asset owners and at the market level. Autobidder has been in use at the Hornsdale Power Reserve (with the Neoen-owned Tesla Big Battery) in Australia for several years, where it has reduced systems costs and exerted downward pressure on prices. Hornsdale’s flexibility saved an estimated A$14 million ($10 million) across Australia’s various markets during a single islanding event in 2019 and saved customers more than A$50 million ($34 million) over its first year of operation.

As markets become more sophisticated and incorporate more DER, transactive energy platforms will have a necessary role in making grid systems more flexible and dynamic. While Autobidder has only been used in combination with energy storage so far (at least publicly), the principles demonstrated at Hornsdale are transferable to any DER asset class, and Tesla has many to choose from.

The Long Game: Widespread Participation of DER in Energy Markets

Tesla’s long-term strategy for Autobidder should involve applying the platform to homes and businesses equipped with Tesla Powerpacks. The platform also has the potential to play a role in the dynamic integration of EVs into grid systems.

However, EVs and residential-scale DER are much smaller than the 100 MW Hornsdale project. To reach a scale that can make a meaningful contribution to wholesale markets, dozens or hundreds of DER across many households and businesses can be grouped together and managed as virtual power plants (VPPs).

VPPs require granular visibility into the performance and characteristics of all of the group’s assets. Technologies such as blockchain, which can be used to create registers of devices and provide a foundation for automating their activities, can enable transactive energy platforms to manage this information while keeping costs low.

Tesla Is Not Alone in Pioneering Automated Markets

Energy companies including Enbala and AutoGrid are following the same path as Tesla and experimenting with different combinations of technologies to maximize the potential of VPPs and transactive energy. Battery storage and vehicle manufacturers such as Tesla have a leg up in this race, as they have access to an existing base of customers and assets. The ability to pair hardware with new revenue streams from grid services will drive more customers to invest in storage, EVs, and behind-the-meter generation; sonnen has already pioneered such a model with its sonnenFlat offering in Australia.

Tesla and Autobidder are just one example of a new kind of utility taking advantage of a new kind of technology. As the transactive energy model expands and proves value to customers, there will be renewed pressure to liberalize electricity markets to allow these companies to bring their products and services to market. Incumbent utilities must consider how they can take advantage of similar technologies directly or through strategic partnerships, or they must prepare to cede the road.