Cities Could Create Massive Virtual Power Plants With Distributed Solar

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Note: If 50,000 homes in a city had solar installed, and that was used not just to satisfy the energy needs of those homes but also to feed the electric power grid, it would transform energy systems in cities. This distributed solar energy system would serve as a virtual power plant and, in the process, the city could also upgrade its energy distribution system to handle new clean energy sources. This could also be a democratized energy grid where individual home owners or renters would also be paid for providing energy to the grid. That would begin to change the economics of energy from top down to bottom up.  KZ

Tesla has been making big moves on the energy storage market in Australia, but they are now all being dwarfed by this new project that will see them install solar arrays and Powerwalls on 50,000 homes to create the biggest virtual power plant in the world.

The company’s main project has been the 100MW/ 129MWh Powerpack project in South Australia, the largest in the world for now.

But now instead of being a large centralized battery system using Tesla’s Powerpacks, the new project announced today is using Tesla’s residential battery system, the Powerwall, to create decentralized energy storage, which basically results in creating a massive virtual power plant.

South Australia Premier Jay Weatherill announced the deal today – the biggest of its kind by far.

The 50,000 homes in the state will be fitted with 5 kW solar arrays and 13.5 kWh Tesla Powerwall 2 battery systems.

It will result in at least 650 MWh of energy storage capacity distributed in the state.

Tesla said in a statement:

“When the South Australian Government invited submissions for innovation in renewables and storage, Tesla’s proposal to create a virtual power plant with 250 megawatts of solar energy and 650 megawatt hours of battery storage was successful. A virtual power plant utilises Tesla Powerwall batteries to store energy collectively from thousands of homes with solar panels. At key moments, the virtual power plant could provide as much capacity as a large gas turbine or coal power plant.”

It will function much like Tesla’s giant Powerpack system, which charges when demand and electricity rates are low and discharges when demand and prices are high.

We reported last month the single battery system managed to make around $1 million in just a few days.

The new project is going to be financed through power sales and it is being assisted by the government with a $2 million grant and $30 million loan from the Renewable Technology Fund.

The government says that they already started installations for a trial in 1,100 Housing Trust properties, which is for lower-income households.

Tesla plans to ramp up its deployment in the next few years and have all 50,000 systems installed by 2022.

Electrek’s Take

I don’t think the scale of this project can be overstated.

After Tesla installed the 100MW/ 129MWh Powerpack project in South Australia last year, Tesla CEO Elon Musk gave an interview during which he was informed of the significant pressure that Australia’s high electricity prices are putting on families.

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

Not long after, Tesla was chosen to build another big battery in Australia and the company is also working with Neoen in the country for projects potentially even larger than the original Powerpack system.

But now this new virtual power plant is going to have an even bigger impact.

With this said, I hope Tesla can quickly ramp up production of the Powerwall. It’s already hard for customers in many markets to get their hands on the home battery pack and now that Tesla is contracted to send 50,000 units to Australia over the next 4 years, it’s likely going to be even harder.