South Australian Premier Jay Weatherill and Tesla’s Elon Musk | Image via Facebook
The South Australian Government has again teamed up with Tesla, this time to install 5kW solar power systems, Powerwall 2 batteries and smart meters on 50,000 homes – at no cost to households – as the next step in its Energy Plan.
How Will The Virtual Power Plant Program Work?
In what’s been called the world’s largest virtual power plant project, participants will have the solar + storage systems installed gratis, but will pay for the electricity produced and mains grid electricity consumed under a special plan provided by a single retailer. Who that retailer will be is yet to be determined.
Surplus electricity generated by the systems will be dispatched to the grid and energy stored in the Powerwall 2 batteries will be released to the grid as required.
The 50,000 centrally-controlled solar + storage systems will work together to generate, store and export electricity; acting as a 250MW/650MWh virtual power plant.
How Much Will Participants Save?
The SA Government says analysis by Frontier Economics shows the program is expected to lower energy bills for participating households by 30 per cent, based on a current electricity cost of approximately 40c/kWh. The reduction is based on all electricity consumed, not just that generated by the solar panels. However, participants’ mileage will vary depending on their circumstances and consumption habits.
Who Will Get The Systems?
Those to receive solar panels and batteries initially will be 1,100 Housing Trust properties. Assuming this phase is successful, all Housing Trust owned properties (~24,000) that are suitable for systems will have them installed, but there is scope for a tenant to object.
Private properties will be eligible to begin participating in 2019 at this stage. Non-Housing Trust households will need to apply and then go through a selection process – not everyone who applies will necessarily receive a system.
In the case of private properties, there may also be options to provide an up-front payment for further discounts on electricity and to also assume ownership of a system after a certain time (these aspects are still rather vague).
It is expected completion of rollout of all solar + storage systems will be in 4.5 years. Prioritising of installs is yet to be finalised and there is scope for additional households beyond the estimated 50,000 to participate.
What Are The Broader Benefits?
As well as benefiting the South Australian households with solar panels and battery systems installed, the Government states the virtual power plant will boost the state’s energy security and bring more competition into the state’s energy market, placing downward pressure on energy prices for all. The program will also generate work for local solar installers and offer some South Australian manufacturers opportunities for involvement.
What Is Tesla’s Role Aside From Battery Supplier?
Tesla is responsible for the installation of the solar + storage systems (the installers they’ll use are yet to be named) and will liaise directly with households in most cases. Post-install, most communications will be with the yet-to-be-named plant operator.
How Much Will It Cost The Government (Taxpayers)?
All things considered, not a huge amount. The virtual power plant will be privately owned and operated. The Weatherill Government is chipping in with a $2 million grant and $30 million loan from the Renewable Technology Fund. The rest of the $800 million needed for the project is to come from investors.
Households wanting to learn more and register their interest in the Virtual Power Plant program can do so here.
Wait For A “Freebie” Or Go Solar Now?
Saving 30% on a power bill isn’t chicken feed, assuming those savings are realised. For those in Housing Trust homes, it’s certainly better than a poke in the eye with a sharp stick. However, for private property participants in a position to buy through various other arrangements, they may be leaving a bunch of money on the table. A good quality, properly installed 5kW solar system purchased outright (and without a battery) may offer a better value proposition.
The Virtual Power Plant initiative is a financed program, and finance must be paid for – in this case through the cost of electricity (albeit reduced).
Those who:
- don’t want to go through the selection process and perhaps be rejected
- prefer to steer away from a one-size-fits-all approach
- are concerned the final terms and conditions may not be to their liking
- are uncomfortable with anything even vaguely resembling a leasing arrangement
- don’t like the idea of someone else’s equipment on their rooftop
- don’t want to potentially wait a few years before slashing their electricity bills
- are hesitant to be tied to an electricity retailer for a lengthy period
- want to maximise the financial benefits of going solar
- have full control over what is installed, how and by whom – and over their stored energy
.. can get no-obligation solar power quotes here on SQ, from pre-vetted installers who will quote on a system (with or without a battery) according to requirements and circumstances. The cost of going solar has dropped rapidly in the past few years, so it’s well worth looking into all the options (including other forms of financing) available.
Stay Tuned To SQ For More
The Virtual Power Plant program is an exciting project, but there are quite a few ifs, buts and maybes associated with it. SolarQuotes founder, Finn Peacock, and SQ’s intrepid blogger, Ronald Brakels, will be posting some in-depth analysis of the initiative very soon. This post will be updated with links to those articles once they are published.
Update: Ronald’s post : SA’s Virtual Power Plant – Virtually Brilliant, But Is It A Good Idea?
(Added January 16, 2020: Compare Australian Virtual Power Plant programs)
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What panels will be used I wonder ? Not provided by Tesla I gather from the lack of such detail in any announcements
How do I apply for this program?
You can go to the South Australian Government’s page on the virtual power plant and register your interest on the right:
http://ourenergyplan.sa.gov.au/virtual-power-plant
Unfortunately, this won’t guarantee you becoming part of the scheme sooner than anyone else, but I don’t think it would hurt.
I do not really understand why they give money to US company instead of investing to Australian one. Why Powerwall not ZCell? It is taxpayers money, better to invest them locally.
I didn’t think I would see another home insulation scheme raise its ugly head again, but I was wrong. I’m not talking about the risk of fly by night operators springing up, though they will . Bringing forward a few years worth of solar installation demand just robs people of paying jobs in the future. Will look bad when the demand disappears after this.
Answering my original question I see 50% of panels are to be from Australia (SA ?) and are likely to be Tindo solar. I wonder what the WTO or TPP agreement will say about ‘reserving’ for locals. Anti trade I suspect.
As for David .. Feb13th comment, you might like to retype that .. in English this time please. But I think I get your drift.. you are concerned about the impact it might have on ‘normal’ demand ? First the 1st 2 years are for government housing, whose renters are EXTREMELY unlikely to get solar otherwise both for cost reasons and difficulty of installing such on a rented unit. In years 3 and 4 its open to another 20,000 on first come first served basis. I suspect it will simply be additive demand to those who want no capital outlay but correspondingly lower returns. The smart money will be for owners to install and pocket all the savings. Demand by then will probably far exceed this program as the economics of batteries and solar become very compelling , never mind the environmental benefits.
The current actual average cost /kWh is 35c in SA ,after the so called , “discounts” , retailers give. Using the 27c/kWh PPA quoted by JW my calculations show savings closer to 22% ,NOT the 30% savings as quoted.
Spool back to June 30 2017 the standard price pre 21% increase was 35c/kWh …How much is this all going to cost the tax payer ?
$2 million. That’s the given cost to the taxpayer, in the form of a grant. An additional $30 million will be loaned, but given the low interest rates the state can borrow at the taxpayers may come out ahead on that.