Tesla Cited for Air Pollution Violations. Its Penalty? Build a Community Microgrid

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Tesla has agreed to pay a $1 million penalty and build a community microgrid in a settlement reached last week with a California air quality board.

community microgrid

Source: Tesla

The settlement covers 33 air quality notices issued by the San Francisco Bay Area Air Quality Management District for activity at Tesla’s Fremont manufacturing facility, where it builds electric vehicles.

The unusual penalty — requiring the company to build a microgrid along with paying a more conventional fine — represents the air district’s efforts to maintain “strict compliance with air pollution regulations while seeking mutually beneficial solutions for the community,” according to Jack Broadbent, air district executive officer.

“As part of this settlement, Tesla has agreed to implement a community microgrid project, which leverages the company’s technological expertise in developing next generation power here in the Bay Area,” he said.

The microgrid will be built in a yet-to-be specified community that is heavily impacted by air pollution, as designated under the air district’s Community Health Protection Program.

The community microgrid will be designed to reduce electricity costs, reduce local air pollution and provide electricity during power outages, which have become more frequent in California because of wildfires. Utilities in the state engage in what’s known as public safety power shutoffs, a practice of turning electricity off to customers if they believe risk exists that power lines will spark wildfires.

The microgrid will use 160 kW of solar, paired with battery energy storage.

The settlement agreement also requires that Tesla install a comprehensive environmental management system, which will track environmental requirements and ensure that the company’s managers are trained on what is needed to comply with them.

Tesla was cited for a range of violations, including emissions exceeding its permit limits, installing or modifying equipment without proper permits, failure to conduct required emissions testing, failure to maintain records and failure to report information to the air district in a timely manner. 

Don’t miss the lively panel discussion, “The Green Energy Balancing Act: How Microgrids Steady the Scale,” scheduled for May 25 at Microgrid 2021, a virtual conference hosted by Microgrid Knowledge. Registration is free if done in advance. Choose from among the 20 sessions offered May 11-June 3. Or join us for all of them!

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.


  1. Great piece, and what a great way to pay back pollution mismanagement, on the job learning, I hope Elisa you keep us informed across the pond, we are watching all your microgridKnowledge.com reporting keenly.

  2. I find it interesting the San Francisco Bay Area Air Quality Management District comes down on TESLA and its operations where there are five refineries working in the San Francisco Bay area also spewing emissions into the local air. Perhaps it’s time for TESLA to set up several megapacks on the Fremont site to offset energy use and emissions caused by such energy use. Perhaps it’s tie for TESLA to add solar PV to every open roof at the facility as well as install solar PV covered parking around all facilities. Should be able to set up several MWp solar PV generation and several MWh of energy storage to offset energy costs for the facility. TESLA is in a better position than many manufacturers in the U.S. right now.