Elon Musk’s Tesla seeks to enter UK energy market

Elon Musk’s Tesla plans to enter the UK household energy market soon, challenging major providers like Octopus Energy and British Gas.

Official documents show that on July 25, Tesla submitted an application to the UK energy regulator, Ofgem. According to Telegraph, the company requested permission to supply electricity to domestic customers.

The filing, signed by Andrew Payne signals a notable step forward in the company’s expansion plans. If approved, “Tesla Electric” could begin serving customers as soon as next year.

The new service is expected to work hand in hand with Tesla’s existing products, such as its electric vehicles and Powerwall battery units, with the goal of cutting household power expenses. Tesla already operates a comparable program in Texas, where customers can benefit from cheaper charging rates for their cars and earn payments for sending unused solar-generated or battery-stored electricity back to the grid.

Reports from 2023 indicated Tesla’s intent to enter the home energy market, alongside recruitment campaigns for policy and operational roles. With tens of thousands of Powerwall batteries already installed in Britain, devices that can store energy from solar panels or off-peak charging, Tesla holds an infrastructure advantage.

Moreover, Tesla offers residential EV charging equipment and has over 250,000 cars on UK roads. This network could be key to rolling out “vehicle-to-home” systems, where a car’s battery can supply power to the household. Several other providers are trialling this type of technology, which Tesla could incorporate.

Tesla is also active in wholesale energy trading, using large-scale battery facilities and its Autobidder platform to buy and sell stored power. The company has held an Ofgem generation licence since 2020.

Even so, the brand faces headwinds. UK sales of Tesla’s electric cars have dropped sharply, with July showing a 60% year-on-year decline, a trend echoed in other European markets, such as Germany, where deliveries fell over 55%. The slump reflects stiffer EV market competition and controversies linked to Musk, including his public support for political figures like Donald Trump and Tommy Robinson.

Tesla is facing persistent sales slump in Europe

Analysts note that even Musk’s recent efforts to distance himself from politics have not reversed the European sales downturn, with Tesla registering five consecutive months of falling deliveries across the continent.

In the US, the company offers a fixed-rate plan for unlimited vehicle charging during certain time windows. Powerwall owners can also link their units to the grid, allowing Tesla to tap into stored energy at peak times in exchange for payments.

This setup, known as a “virtual power plant,” combines small-scale energy sources to help stabilise renewable supply.

Although the company hasn’t yet outlined pricing or specific plans for the UK, job postings point to virtual power plant integration as a key feature. The system would capture excess wind and solar power when available, then release it back to the grid during demand surges.

Tesla previously joined forces with Octopus Energy in 2020 for a combined energy tariff but ended that collaboration three years later to operate independently. It still works with Octopus so Powerwall owners can use the latter’s software to sell stored power at premium times.

Approval for an Ofgem electricity supply licence can take up to nine months, though in some cases the process is quicker. Rules have become stricter since the 2021 energy market crisis, when multiple small suppliers collapsed.

Tesla has not applied for a licence to supply gas, so households using both fuels will still need a separate gas provider.

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