Tesla’s virtual power plant system will begin testing in 1,100 public housing properties.  Tesla image.

Virtual power plant will generate ‘significant’ portion of households’ electricity needs

Months after Tesla built the world’s largest lithium-ion battery installation in South Australia, the state government and Elon Musk’s company are working together on a virtual power plant that could power up to 50,000 homes and feed electricity back to the grid.

Currently, about two-thirds of Australia’s electricity needs are generated by fossil fuels, mainly coal.  Along with environmental repercussions from using coal, residents have had to suffer through blackouts due to extreme heat and storms.

South Australia and Tesla are teaming up to build a 250MW virtual power plant that will consist of thousands of solar panels and batteries installed in some public housing.

These panels and batteries will run software that will decide when to store energy in the Tesla 13.5kWh Powerwall and when to sell it back to the grid.

The first part of the system test, the installation of systems in 1,100 homes, is expected to continue throughout this year and into 2019.  If the trial is successful, another 24,000 Housing Trust homes will be outfitted with the Tesla solar panels and battery.  Installations in public housing will be free of charge.

Should the second phase goes well, another 25,000 private South Australian homes could buy into the system.  Homeowners will pay for their systems and, at this time, pricing has not been disclosed.

Homes which are part of the virtual power plant will have to pay for the electricity they consume.

According to Jay Weatherill, Premier of South Australia, the Tesla systems should save participants up to 30 per cent on their energy bills.

Grid managers see benefits to the virtual power plant as well.  Instead of racking up costs for independently sourced distributed generation as electricity use jumps in the evenings when people are home, the Tesla system acts as a utility-grade solar and storage system.

Participants cannot go fully off-grid during normal operations, but the panels and battery will work in a blackout by disconnecting from the grid and sending electricity to the home where the panels and battery are installed.

Initial stages for the program are being funded by the government of South Australia.  The state’s website says “The virtual power plant is being fast-tracked by a A$2 million grant and A$30 million loan from the Renewable Technology Fund. The total value of the project is currently estimated at approximately A$800 million which will come from investors.

Similar to traditional electricity generation installations, investors would earn a return through electricity being sold back to customers.