Earlier this year, Tesla announced that it reached a deal with the South Australian government to install solar arrays and Powerwalls on up to 50,000 homes to create the biggest virtual power plant in the world.
A new government was elected in the state a few weeks later and they quickly cast doubts about following through with the massive plan.
But now they confirmed that they will be moving forward with Tesla’s initiative.
Tesla reached a deal with the Labor party for the virtual power plant idea and the government’s support helped the company focus on installing half of the Powerwalls in low-income households in order to reduce their energy bills.
When the Liberal party won the elections in March, new Premier of South Australia, Steven Marshall, said that he would favor his party’s own plan to offer discounts on 40,000 home battery packs, which would have mostly gone to higher income households who could afford it.
In a speech at the Australian Energy Storage Conference, Energy Minister Dan van Holst Pellekaan has now clarified that the Government would implement both plans (via ABC):
“It’s very important to be clear about this — we are honouring the existing commitments around the Tesla virtual power plant (VPP),” he said.
“The VPP project is currently proceeding with the two trial phases as planned. The trial phases involve installation of home energy systems on 1,100 Housing SA homes.
“These are supported by a $2 million grant and a $30 million loan from the State Government.
“Subject to private finance, and the first two phases’ success, the third phase could grow to up to 50,000 home batteries connected to new solar installations, and this is in addition to our government’s 40,000 home election commitment.”
van Holst Pellekaan said that the first meeting he took when he became Energy Minister was with Tesla.
He was impressed with the company and the performance of its Powerpack installation in South Australia:
“Within the first month of it being installed, it helped to smooth out two major trips. I’m very glad Tesla is working with our Government. It’s a great partnership shining a spotlight on South Australia.”
We recently reported on how the battery system helped reduce the cost of the grid service that it performs by 90% and it has already taken a majority share of the market.
It’s charging using cheap and clean renewable energy and discharging into the grid when it needs it the most. By doing so, it is replacing dirty and expensive fossil fuel peaker plants.
Tesla’s new plan is expected to have an even bigger impact but instead of being a large centralized battery system using Tesla’s Powerpacks, the new project is using Tesla’s residential battery system, the Powerwall, to create decentralized energy storage, which basically results in creating a massive virtual power plant.
This is great news for South Australia. It could technically result in almost 100,000 home battery packs deployed in the state over the next few years.
The Liberal party’s $2,500 incentive will help accelerate deployment with those who can afford the rest of the $7,500 to $10,000 cost of a home battery system, while Tesla’s project could focus on lower-income households.
It’s truly an extraordinary deployment of energy storage capacity.
van Holst Pellekaan called it “a mass adoption of home batteries”:
“This is a complicated task — I don’t think that anyone has attempted to do what we’re about to do at this scale relative to population and market size.”
I don’t think either, but I glad they are attempting it.