Tesla virtual power plant in Australia reduces electricity rate by ‘more than 20%’, moving to phase 3

Tesla is working on a giant virtual power plant made of 50,000 Powerwalls and solar systems in Australia and the local government says that the first phases have shown a reduction in electricity rates by “more than 20%.”

Now they are moving to the third phase of the virtual power plant.

Tesla Virtual Power Plant

The project is the biggest of its kind and it would dwarf any other stationary energy storage deployment if it is ever completed.

It came around after Elon Musk visited South Australia following the launch of its giant battery system in the state.

Musk gave an interview during which he was informed of the significant hardship that Australia’s high electricity prices are putting on families.

Visibly affected by the issue, Musk vowed that Tesla would “work harder” to help solve the problem.

A few months later, Tesla announced that it reached a deal with the South Australian government to install solar arrays and Powerwalls on up to 50,000 homes.

The deal was jeopardized after a new government was elected in the state a few weeks later, but they have since come around and confirmed that they will be moving forward with Tesla’s initiative as long as it is financed successfully.

Tesla Virtual Power Plant Phase 1 and 2

In July of 2018, Tesla deployed the first 100 Powerwalls with solar for the new virtual power plant and focused on reducing the cost of electricity for low-income households.

A few months later, the project moved to its second phase and Tesla started deploying 1,000 more systems as part of the virtual power plant.

Tesla Virtual Power Plant Phase 3

Now the government says that the first two phases of the program have proved successful and households with the Powerwalls and solar power systems are already seeing significant savings on their utility rates.

Minister Dan van Holst Pellekaan commented:

“This VVP is delivering affordable electricity to some of South Australia’s most disadvantaged households whilst increasing the reliability of the state’s electricity network. Households participating in the Phase 2 trial are charged electricity rates more than 20 percent better than the Default Market Offer introduced on 1 July 2019. Tesla is regularly reviewing and benchmarking the VPP Program Offer to ensure the program continues to deliver the savings promised to customers and that the VPP Program Offer is the best published retail offer in the South Australian market. Results from Phase 1 and Phase 2 are already contributing towards the design of the potential Phase 3 to enable as many families as possible to benefit from this program. In particular smaller 5kW solar systems are already being trialled to allow for more properties with smaller roofs or other physical constraints to be included.”

They are using what they are learning from the first two phases to more efficiently deploy the third and biggest phase of the project.

Minister Dan van Holst Pellekaan added:

“Phase 3 of the VPP could see 50,000 homes connected to the VPP becoming the equivalent of a 250MW virtual power plant. VPP’s will be an integral part of the future of Australia’s energy system, allowing people with solar panels to store the energy they generate during the day to power their home after the sun goes down.”

The project has been supported by a $2 million grant and $20 million loan from the South Australian Renewable Technology Fund.

They will use the project to learn how the integration of distributed energy resources can “unlock scalable consumer value and power system reliability and security in the National Electricity Market.”