Elon Musk may be banking on his UK energy plan to boost Tesla's fortunes

Tesla's (TSLA) recent announcement that the company had applied to the regulator Ofgem revealed how keen Elon Musk is to shake up the UK energy market.

The EV maker's bid to power UK homes and businesses is not a complete surprise, given that the company has been active in the energy space for a while, albeit in Texas and Australia. Its dedicated division, Tesla Energy, launched in 2006 and has developed battery and solar energy products, among others, with varying degrees of success.

Tesla's Megapack and Powerwall energy storage systems are among the more notable products but revenues in the energy division have fallen year-on-year, company filings show.

Read more: How Tesla’s Cybertruck could keep UK homes running for days

Still, it's clear Musk wants a piece of the UK energy market and is hoping it could help Tesla's fortunes. Tesla did not respond to a request for comment from Yahoo Finance UK.

Problems have piled up for the EV maker over the past year, from slumping vehicle sales to a fall in operating income.

Musk's work for Donald Trump's administration, specifically the Department of Government Efficiency (DOGE) team, led to a bitter fallout with the US president and speculation that Tesla investors were unhappy with his foray into politics.

Seeking to reassure investors that Tesla (TSLA) was his priority, Musk said in a second-quarter conference call that there were a "few rough quarters ahead" but the long-term outcome for the company was "very high".

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One potential bright spot is the $16.5bn (£12.3bn) chip deal that Musk said Tesla (TSLA) had signed with Samsung (005930.KS).

Tesla's UK energy plan may be less high-profile than some of Musk's other ventures, illustrated in the chart below, but if it manages to solve distribution problems within a constrained network, the move could prove a winning strategy.

Scott Flavell, head of energy for global consultancy firm Sia, told Yahoo Finance UK: "Tesla’s planned UK energy market entry, via Tesla Energy Ventures, is less about selling household Powerwalls and more about cementing a position in large-scale energy storage and grid flexibility.

"Already a global leader in utility-scale batteries, Tesla sees an opportunity in the UK’s constrained energy network, where bottlenecks in transmission are slowing the delivery of renewable generation to demand centres."

Flavell added: "By combining its Megapack infrastructure with targeted renewable generation, such as large-scale solar in less-constrained areas, Tesla can store surplus energy during low-demand periods and release it when the market pays a premium. The retail electricity offer, while grabbing headlines, serves as a customer acquisition layer and a source of aggregated flexibility to feed into this bigger play."

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There are no guarantees that Ofgem will approve the application but if the plan does succeed, Tesla could gain the power-up it needs by becoming a big player in the UK energy market.

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