SA, Tesla's $800m, 250 MW virtual power plant

The South Australian Government has announced plans to build a 250 MW virtual power plant.

The project will involve rollout of 50,000 home solar and battery systems across the state and is expected to meet around 20% of South Australia’s average daily energy requirements.

The rollout will begin with a trial of 1100 Housing Trust properties — a 5 kW solar panel system and 13.5 kWh Tesla Powerwall 2 battery will be installed at no charge to the household and financed through the sale of electricity, the government said on its website.

“More renewable energy means cheaper power for all South Australians, but it also means the jobs of the future,” said SA Premier Jay Weatherill.

“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.”

“Following the trial, which has now commenced, systems are set to be installed at a further 24,000 Housing Trust properties, and then a similar deal offered to all South Australian households, with a plan for at least 50,000 households to participate over the next four years,” said the government in a statement.

The government will soon release a market notice for a retailer to deliver the program, with a preference of bringing more competition into the market.

Jobs

The project will create more than 500 renewable energy jobs, with local manufacturers set to play a key role, the government said in a statement. “It is anticipated that around 250 new jobs will be created through the installation of Tesla Powerwall 2 products on as many as 50,000 South Australian homes over the next four years.

“Up to 260 extra jobs are expected to be created throughout the supply chain, with the government’s contract with Tesla stipulating that local contractors must be used.”

The $800m project virtual power plant will be privately owned and operated — the process for financing the majority of the costs of the program will commence later this year, the government said on its website.

The state government will also contribute $1.25 million to help South Australian businesses secure contracts on major renewable energy projects, like the world’s largest virtual power plant, the government said in a statement. “The funds will help local companies meet costs when preparing their pitch for large-scale projects — costs which can inhibit the ability to grow their business.”

Service hub

“Tesla have also confirmed they will establish a Service Hub at Tonsley — a commitment that falls within the Hornsdale Battery Project.

“The Service Hub will allow for local technicians to monitor and service the Powerpacks in Hornsdale, along with the Superchargers that have been installed across the state, and the residential Powerwall installations — including those announced as part of the virtual power plant.

“The Tonsley-based Service Hub has the potential to service Tesla batteries throughout Asia Pacific, and will create additional local jobs — with an increasing number of South Australians developing expertise in renewable energy technologies, an ever-growing industry.”

While Tesla will install the systems and liaise directly with households, in some cases households will be contacted by Housing SA first to discuss suitability of property.

“As a whole, the virtual power plant could add up to a new 250 MW/650 MWh, dispatchable power plant that can meet around 20% of our state’s total average daily energy requirements, adding competition to the market and putting downward pressure on everyone’s energy bills,” the government said on its website.

 “In addition, the virtual power plant will provide security services through the distribution network (like the Tesla Powerpack ‘Big battery’), helping keep the power on during events or disturbances in the network.

Key objectives

The key objectives of the virtual power plant are to: establish a new, dispatchable renewable energy power plant, providing energy when it is most required; demonstrate the ability of a virtual power plant to deliver savings to households and improve the resilience of the grid; introduce competition into the South Australian energy market, placing downward pressure on energy prices; provide significant cost savings to consumers participating in the program; and provide significant employment opportunities for installers and opportunities for involvement by South Australian manufacturers.

“The project is being fast-tracked by a $2 million grant and $30 million loan from the Renewable Technology Fund. The project will be funded by investors. Proposals under the Renewable Technology Fund were received through an open call for proposals in September 2017. The virtual power plant proposal by Tesla, in addition to a range of other projects, represented significant value and warranted investment by the Fund.”

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