The South Australian Government is planning to build the world’s largest virtual power plant, drawing on solar PV and storage systems installed free in at least 50,000 homes.

The project will use Tesla Powerwall batteries and Premier Jay Weatherill said the virtual power plant will be financed by the sale of electricity.

A trial has begun in Housing Trust properties. The first 100 homes will have systems installed by June 30 with another 1,000 planned for the following 12 months. A further 24,000 systems are set to be installed in Housing Trust properties on completion of the trial.

South Australian households will then be offered the deal, bringing total installations to 50,000 systems within four years.

The announcement comes ahead of a state election to be held on March 17.

The government said analysis by Frontier Economics showed the 250MW system would lower energy bills for participating households by 30%, mainly as a result of lower network costs.

“In principle, it’s quite simple technology. It just requires a smart computer system to stitch it all together,” said Frontier Economics managing director Danny Price.

Once a retailer is finalised to operate the scheme it will be able to supply power from the virtial plant into the broader grid.

The project will be initially funded by a $2 million grant from the South Australia government and a $30 million loan from the Renewable Technology Fund.