7 things to know about Tesla’s world’s biggest virtual power plant

The 250MW Tesla virtual power plant in South Australia unveiled on Sunday is not just the world’s biggest of its kind, it’s a huge leap towards the future grid, where around half of electricity demand will be sourced from local generation, from houses and businesses. But how exactly will it to work? Here’s some of what we know so far:

Who gets the 5kW solar plus 13.5kWh Tesla Powerwall battery systems? The plan is for 50,000 households over four years, around half of them public housing estate homes, and up to 25,000 privately owned low income housing and rental homes.

Will they be “free” for private households? While Housing Estate residents will have the systems installed for free – via a $2 million state government grant and a $30 million loan – residents will pay for the use of the solar and battery, around 27c/kWh, which compares to near 40c/kWh for grid based use. It’s not clear how private homes will access the scheme, but are likely to have a choice of doing the same “free install” and paying for output (effectively a lease), or buying outright.

Who benefits, and by how much? Modeling by Tesla and Frontier Economics suggests a one-third reduction in electricity costs for Housing Estate homes. Broader benefits for the market include the ability to provide “back-up” power, reduce grid demand in summer peaks and provide “network security” services through the battery. Further benefits in increased competition in wholesale and retail markets, and likely a reduction in grid upgrades.

Who is managing the scheme? Tesla will oversee the initial roll-out and then it will be the responsibility of a retailer, which will be named after a government tender. The government has said it wants a new retailer in the market, and smaller companies like Powershop have indicated this could provide the opportunity to move into South Australia.

Where will the solar panels and battery storage come from? The batteries will come from Tesla, the solar modules will come from a range of sources. The SA government wants 50 per cent of panels sourced from Australian manufacturers, which places the Adelaide-based Tindo Solar, the only solar module “manufacturer” in Australia, in prime position.

How will the VPP work? The full roll-out will create a “viritual power plant” with 250MW of capacity and 650GWh of storage. Some of this capacity will be able to be deployed into the market, while part of the solar output will be supplying the host households, so will contribute by reducing grid demand, particularly in those afternoon peaks.

Will their air-con be switched off at times of peak demand, when it gets really hot? A favourite meme of the 4M crowd (Murdoch Media Mischief Makers). But no. A portion of the battery could be secured. And if really hot, the rooftop system is likely to be generating solar. In any case, it will act like a demand response scheme, when such “load shedding” is voluntary.

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Giles Parkinson