South Australia wants to build the world’s biggest virtual power plant from Tesla batteries in 50,000 homes

Elon Musk during a visit to South Australia last year. Mark Brake/Getty Images

The South Australian government has revealed an ambitious plan to connect 50,000 homes using solar power generation and Tesla batteries to create 250-megawatt (MW) virtual power plant (VPP) — the world’s biggest.

On the first day following the announcement, South Australian premier Jay Weatherill said more than 6,500 households have registered an expression of interest to be part of the project — around 25% of the number required.

“My government has already delivered the world’s biggest battery, and now we will deliver the world’s largest Virtual Power Plant,” he said.

“We will use people’s homes as a way to generate energy for the South Australian grid, with participating households benefitting with significant savings in their energy bills.”

The roll out is expected to take four years to complete and cost up to $800 million. The network will have 650MWh of storage to add to the grid when demand is high and improve grid stability.

The project is 50 times the size of AGL’s $20 million 5MW project in Adelaide — hailed at the time as the world’s largest residential VPP nearly 12 months ago, where Weatherill delivered a tirade at federal energy minister Josh Frydenberg.

The premier says economic modelling suggest households taking part in the project will lower their energy bills by more than 30%.

The project has begun with a trial of 1,100 public housing properties, fitted with a Tesla Powerwall 2 battery for free. The government says they’re being financed through the sale of electricity — although estimates are that the break-even point on a Powerwall 2 is around six years.

At the end of the trial, a further 24,000 public housing properties will have the systems installed, with a similar deal offered to all South Australian households.

The state government is tipping in a $2 million grant towards the roll out, as well as a $30 million loan from the Renewable Technology Fund.

In December last year, South Australia switched on the world’s largest lithium ion battery — a 100MW plant built by Elon Musk’s Tesla at Hornsdale, 230km north of Adelaide, and connected to a wind farm. It was part of a $550 million plan by the Labor government to guarantee energy supply following a statewide blackout in 2016 that turned into a national political debate over energy security and costs.

Weatherill’s latest announcement comes in the lead up to a state election next month on March 17.

The premier claims the VPP project will create more than 500 renewable energy jobs, including 250 during the installation phase, involving 13.5kWh Tesla Powerwall 2 batteries connected with a 5kW solar panel system.

“We want South Australian companies to reap the benefits of our major renewable energy projects, which is why we insisted upon local manufacturing for the Virtual Power Plant,” he said.

As part of the Hornsdale project, Tesla is opening a service hub which the government says will be used to also service the residential Powerwall installations.

The state government will start looking for a retailer to deliver the program later this week, saying its preference is to increase competition. It also plans to offer $1.25 million for state-based businesses to bid for contracts involving major renewable energy projects.

Prime Minister Malcolm Turnbull launched the South Australian Liberal’s election campaign yesterday describing the government’s policy as a “reckless energy experiment”, as the Opposition seeks to wrest control from Labor after 16 years in power.

Here’s Labor’s latest proposal for a virtual power plant explained: