Traditional electricity generation has been built around large plants that create large volumes of power that are distributed over transmission and distribution networks to consumers. Even most of the large renewable generation assets work in the same way, although they use sustainable sources like the sun or wind rather that carbon-based sources that leave us with emissions and other problems.
The idea of a Virtual Power Plant changes that. Elon Musk and the Premier of South Australia are redefining the nature of power generation and distribution.
Musk is proposing to install solar panels and batteries to 50,000 homes in South Australia at no cost to the home owners. But here's the catch. The power that's generated and stored won't be going to this home directly. Instead, it will be pooled and sold back into the grid. In other words, consumers will have a small piece of a power station installed on their property with the payoff coming in the form of discounted energy.
The virtual generator is expected to generate about 250MW of energy, meaning it will deliver about as much energy as a gas turbine plant. It will deliver about twice as much energy as the Tesla battery farm that was installed last year.
A representative from the Australian Energy Market Operator (AEMO) told us the precise nature of how the energy created by the Tesla scheme will be bid into the existing electricity market is unknown. Nor is it clear if homes that have the panels and batteries installed will be compelled to connect through a specific retailer in order to attract discounted prices.
The first 25,000 installations will be on SA Housing Trust properties owned by the SA Government.
The energy market in Australia is ripe for disruption and schemes such as this are likely to be come more popular as people rail against the national energy policy, which seems to be at the beck and call of the coal industry, and more homes want to do their part to reduce costs and emissions by installing their own solar equipment.