A virtual power plant will be supplied by solar and battery storage systems installed on 3,000 social housing residences in South Australia, driving down tenant energy bills while delivering Australia’s largest distributed virtual power plant, or VPP.

Housing SA tenants who sign up for a special low electricity tariff will have 5kW in rooftop solar and a 13.5kWh Tesla Powerwall system installed at their home at no cost to them.

The program is supported by a $30 million investment by the CEFC, an $8.2 million grant from ARENA, $10 million from the South Australian Government’s Grid Scale Storage Fund and an $18 million equity contribution from VPP operator Tesla.

Phase 3 of South Australia’s VPP (SA VPP) will bring together a centrally controlled group of solar-powered, battery-backed homes to act as a single “power plant”, with the ability to send excess lower cost renewable energy to the grid.

The solar plus battery storage systems will be able to generate about 80% of a tenant’s annual electricity requirements from renewable energy, drawing from the energy generated and stored on site, and reducing their reliance on the grid. The tenant pays for all the electricity they use whether it is from the battery or the grid, at an exclusive low rate electricity tariff which is 22% lower than the Default Market Offer in South Australia.

Excess energy will be available for sale to the National Electricity Market, creating an additional revenue stream for the SA VPP, while also providing wholesale energy and ancillary services to support a low emissions grid.

“We expect to see decentralised battery fleet systems become an increasingly important feature of the grid of the future, drawing on fast ramping services, voltage management and synthetic inertia,” said CEFC CEO Ian Learmonth.

“Tenants are often locked out of the clean energy market because they are unable to install rooftop solar systems on rental properties. The SA VPP is delivering an innovative clean energy solution to Housing SA tenants, drawing on proven and cost-effective technologies.”

Step up

The Tesla SA VPP is currently operating a national VPP trial involving 1,000 homes. In its analysis of the performance of the trial VPP, the Australian Energy Market Operator (AEMO) found that “consumer devices, when aggregated and coordinated, can contribute to a secure electricity system and reward participating households”.

With the additional 3,000 homes, the extended SA VPP will be able to generate an estimated 20MW in solar energy, with 54MWh of combined battery storage.

AEMO has forecast that rooftop solar could provide 22% of Australia’s total energy by 2040, representing as much as 50GW. At the same time, embedded battery storage capacity, including VPPs, will make up as much as 30GW of energy, paving the way for VPPs to significantly contribute to Australia’s future lower cost, low emissions energy system.

The VPP is an important demonstration of how distributed “smart” storage can be used to aggregate, optimise and dispatch renewable energy to tenants, as well as the energy markets and network operators, Learmonth said.

“With this investment we are seeking to strengthen the business case for further investment in VPPs, taking advantage of our vast solar potential and opening up commercial-scale revenue opportunities for batteries.”