Smart Cities

Tesla to Build the World’s Biggest Virtual Power Plant

Elon Musk and Tesla are never out of the news for long, their regular media coverage usually takes the shape of a world’s first, biggest, or fastest. So it wasn't a surprise, when late last week Tesla Energy announced their involvement in another mega-project - the biggest virtual power plant (VPP) in the world. “Supply and demand resources can work together rather than against each other in the modern energy system. New technologies and greater intelligence are redefining the supply – demand relationship; increasing efficiency, enabling distributed generation and reducing overall consumption. At the forefront of this evolution is the VPP,” we wrote in an article entitled: Virtual Power Plants: Our Energy Future is Distributed, Efficient and Intelligent. VPPs take advantage of information and communication technologies (ICT) to bring together multiple forms of distributed electricity generation, typically small-scale renewables. VPPs also utilize artificial intelligence to take greater control over demand, by continuously re-prioritizing and rescheduling […]

Stay ahead of the pack

with the latest independent smart building research and thought leadership.

Have an account? Login

Subscribe Now for just $180 USD per year per user ( just $15 USD per month) for Access to Quality Independent Smart Building Analysis!

What Exactly Do you Get?

  • Read every article published in full and get unlimited access to our archive of over 1,400 articles.
  • 10% discount on ALL Memoori Research reports for Subscribers! So if you only buy ONE report you will get your subscription fee back!
  • Industry-leading Analysis Every Week, Direct to your Inbox.
  • AND Cancel at any time
Subscribe Now

Elon Musk and Tesla are never out of the news for long, their regular media coverage usually takes the shape of a world’s first, biggest, or fastest. So it wasn't a surprise, when late last week Tesla Energy announced their involvement in another mega-project - the biggest virtual power plant (VPP) in the world.

“Supply and demand resources can work together rather than against each other in the modern energy system. New technologies and greater intelligence are redefining the supply – demand relationship; increasing efficiency, enabling distributed generation and reducing overall consumption. At the forefront of this evolution is the VPP,” we wrote in an article entitled: Virtual Power Plants: Our Energy Future is Distributed, Efficient and Intelligent.

VPPs take advantage of information and communication technologies (ICT) to bring together multiple forms of distributed electricity generation, typically small-scale renewables. VPPs also utilize artificial intelligence to take greater control over demand, by continuously re-prioritizing and rescheduling demand activities to optimize the overall system. These dynamic systems are providing benefits to all stakeholders, from the utility to the end user, and truly represent a new era for energy.

The plan for this new VPP is to roll out a network of at least 50,000 home battery systems across South Australia. Tesla will be working alongside other firms and the State Government – who are providing a $2 million grant and $30 million loan from the Renewable Technology Fund. “Our energy plan means that we are leading the world in renewable energy and now we are making it easier for more homes to become self-sufficient,” said Jay Weatherill, Premier of South Australia (SA).

Beginning with a trial of 1100 Housing SA properties, a 5kW solar panel system and 13.5kWh Tesla Powerwall 2 battery will be installed at no charge to the household and financed through the sale of electricity. Following the trial, which has now commenced, systems are set to be installed at a further 24,000 Housing Trust properties, and then a similar deal offered to all South Australian households, with a plan for at least 50,000 households to participate over the next four years.

The project is expected to be welcomed by consumers. Analysis by Frontier Economics shows the 250MW plant is expected to lower energy bills for participating households by 30%. While a recent report by the Australian Energy Market Commission said that energy prices in South Australia are expected to fall by approximately $300 over the next two years for the average household. Additionally, all South Australians will also benefit from the increased generation in the South Australian energy mix, through lower energy prices and increased energy stability.

In September 2016, a “50-year storm” damaged critical infrastructure in the state of South Australia, causing a state-wide blackout and leaving 1.7 million residents without electricity. Further blackouts occurred in the heat of the Australian summer in early 2017. In response, the South Australian Government turned to Tesla last year, to build the largest lithium-ion battery storage project in the world. At 100MW / 129MWh, the battery system provides enough electricity to power more than 30,000 homes, and Tesla built it in just 100 days.

It seems that natural disasters are a common trigger for the establishment of large VPPs. The frequency of earthquakes has become a increasing concern in Japan after the Fukushima nuclear accident. However, physical space for new generation facilities are a problem in the densely populated Asia-Pacific archipelago. So instead of physical power plants, Japan is launching a number of VPP projects to answer to its electricity challenges.

On the December 11th, US based artificial intelligence-driven energy storage service provider Stem Inc, announced a partnership with large Japanese sogo shosha (general trading conglomerate) Mitsui & Co. Endorsed by the Ministry of Energy, Trade and Infrastructure (METI), the pair intends to build a VPP that will initially be deployed across more than 750 kWh at multiple sites.

Back in Australia, during the two months that Tesla’s 100MW battery system has been active, Tesla’s CEO Elon Musk was exposed to the pressure that Australia’s high electricity prices are putting on families and vowed to to something about it. In fact, South Australia has among the highest electricity prices in the world, averaging around 47.13¢ per kWh (against an EU average of 29.85¢, and just 15.75¢ in the US). So it seems logical that the state would be the one to pioneer a VPP project of this scale.

There is little doubt that our energy future will be distributed, efficient and intelligent, and these characteristics are epitomized by the Virtual Power Plant. The success of the project in South Australia, and other projects like Stem’s in Japan, mark a turning point for our energy system, redefining the supply – demand relationship. Off the back of these projects we should expect to see many more VPPs rolling out in the coming years.

[contact-form-7 id="3204" title="memoori-newsletter"]

Most Popular Articles

Net Zero Buildings Balfour Hospital
Energy

Net Zero Buildings Explored – The Balfour Hospital

The Balfour Hospital in Kirkwall, on the remote Scottish islands of Orkney, has established itself as the first fully net-zero National Health Service (NHS) hospital in the UK in 2019. The £65 million facility, designed to accommodate 49 patients, has pioneered an innovative and sustainable approach to design, construction, and operation processes. Delivered by the […]

CXApp SPAC
Smart Buildings

Smart Building SPAC Trend Continues with Hybrid Work Play CXApp

Since 2019 the business world has been inundated with high-profile SPAC deals. And while we have certainly seen a slowdown in SPAC deals in recent months, the SPAC trend is by no means over. In the smart building industry, a new SPAC was completed this month, as workplace experience platform provider CXApp completed a business […]

Belimo
Energy

Belimo Building Controls Business & Growth Strategy 2022 Examined

In this Research Note, we examine the Belimo Group, based on their 2022 annual report, investor presentations, financial results announced on 6th March 2023 and their long-term growth strategy in the building automation field devices sector. Belimo Group, a listed company on the Swiss Stock Exchange, is headquartered in Hinwil, Switzerland with over 2,000 employees. […]

Subscribe to the Newsletter & get all our Articles & Research Delivered Straight to your Inbox.

Please enter a valid email

Please enter your name

Please enter company name

By signing up you agree to our privacy policy