South Australia’s state government has struck a deal with Tesla Inc. (TSLA) to install solar and battery systems in thousands of local homes.
The plan is to use the Palo Alto, California-based company’s technology to create a decentralized electric grid managed by software. Tesla’s 5 kilowatt solar panels and 13.5 kilowatt-hour Powerwall 2 batteries will be installed in selected homes free of charge and financed through electricity sales.
The scheme began with a trial of 1,100 public housing properties and is now set to be rolled out to about 24,000 government-owned housing units. After that, the plan is to make the technology available to at least 50,000 households within four years, creating the world’s largest ever virtual power plant. The government said in a statement that the project will cost $32 million Australian dollars ($25 million).
Initial responses have been positive. One early recipient told the Australian Broadcasting Corporation that Tesla's solar panels and batteries made it much cheaper to power homes. Energy bills in participating households are projected to fall by 30 percent, according to Energy Minister Tom Koutsantonis.
Tesla’s deal with the South Australian government came after it won a bid to build the world’s largest lithium-ion battery in the region last year. The battery, which is used as a grid backup system to prevent blackouts when bad weather stops conventional power plants from operating properly, has been a huge success. (See also: Tesla Turns on World's Largest Lithium-Ion Battery.)
South Australia’s plan to use Tesla’s expertise once again, this time to create the world’s largest virtual power plant, will be contingent on the results of the state elections in March. Jay Weatherill, the current premier of South Australia, has faced opposition to his energy experiments, although his main opponent is also said to be in favor or using large-scale solar power sources.
Success in Australia, one of the world’s biggest users of rooftop solar panels, has reinvigorated Tesla’s alternative energy ventures. The company acquired SolarCity in 2016, but has since experienced falling installation requests in its domestic U.S. market. (See also: Wozniak Turns Tesla Critic—Doesn't Trust Elon Musk.)