{"id":18889,"date":"2018-02-05T11:09:30","date_gmt":"2018-02-05T00:39:30","guid":{"rendered":"https:\/\/www.solarquotes.com.au\/blog\/?p=18889"},"modified":"2021-02-10T13:43:42","modified_gmt":"2021-02-10T03:13:42","slug":"sa-virtual-power-plant","status":"publish","type":"post","link":"https:\/\/www.solarquotes.com.au\/blog\/sa-virtual-power-plant\/","title":{"rendered":"SA Plan For New Private Generator Using Solar Panels On Roofs And Tesla Powerwalls Is Virtually Brilliant!"},"content":{"rendered":"
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But is is a good idea?<\/p><\/div>\n

Yesterday I was surprised by the South Australian Government announcing a plan<\/a> to put solar panels on the roofs of 50,000 or more homes along with a Telsa Powerwall 2 and smart meter.\u00a0 The goal is to have them work together to create a virtual power station<\/a> with 250 megawatts of solar panels and battery storage that can provide 250 megawatts of power over two and a half hours.<\/p>\n

The virtual power station will not belong to the SA Government, but will be privately owned.\u00a0 It will be a new, independent generator that will increase competition in the electricity market.\u00a0 The State Government is kicking it off with a $2 million grant and a $30 million dollar loan, but the total cost for 50,000 homes is estimated to be $800 million, which will be provided by private investors.\u00a0 This comes to $16,000 per home, which sounds about right, though the cost should decline as time goes by.<\/p>\n

The project will begin with a trial in 1,100 Housing Trust homes and this is apparently already underway, although I suspect only on a very small scale.\u00a0 The first installations in private homes will begin in 2019 and the target of 50,000+ homes is planned to be reached in four and a half years.<\/p>\n

Electricity bills for participants will be reduced by an estimated 30%.\u00a0 Housing Trust residents who agree to take part will have their electricity bills reduced even if their home is judged unsuitable for rooftop solar due to shading or other issues.\u00a0 The Tesla Powerwalls will provide electricity to homes during a blackout, but will only supply a maximum of 5 kilowatts and only if the batteries are at least partially charged.\u00a0 Because the batteries will be used to buy and sell electricity it is possible they will be flat or low on charge when a blackout occurs.<\/p>\n

By increasing the amount of competition in the electricity market the virtual generator should bring down grid electricity prices for everyone, even if they aren’t involved in the scheme.\u00a0 Provided there are no disasters, this could lead to the development of large virtual power stations elsewhere in the country and potentially overseas.<\/p>\n

Shocked And Confused<\/h2>\n

When I first heard about the virtual power plant plan I was shocked.\u00a0 Shocked and confused — I was shockused.\u00a0 This is because I thought the SA Government was going to own the solar panels and Powerwalls and my understanding is this would be legally problematic because of the privatization of the state’s electricity sector.\u00a0 But as I looked into the details, what I saw was actually a cunning plan to work around the problem of the State Government not being responsible for electricity generation while still being blamed by the Coalition for anything and everything that goes wrong, including tornadoes<\/a> and decisions at the national level by the AEMO not to require generators to supply power<\/a>.<\/p>\n

A Cunning Plan<\/h2>\n

One reason why South Australia has high electricity prices is the lack of competition in the state.\u00a0 Normally this results in prices averaging slightly higher than they would be otherwise. But in July 2016, closure of the Heywood interconnector with Victoria allowed a lack of competition to increase average wholesale electricity prices by over 500%<\/a> compared to July 2015.<\/p>\n

By kick-starting a privately owned virtual power plant with a $2 million grant and a $30 million loan, the SA government is getting a new competitor in the electricity market.\u00a0 One that can provide dispatchable power almost instantaneously<\/a>. \u00a0And provided the Concentrating Solar Power plant with thermal storage<\/a> 30 kilometers north of Port Augusta goes ahead, that will be two new competitors they’ll have ushered in.<\/p>\n

Improved Reliability And Energy Security<\/h2>\n

Australia’s National Electricity Market, that covers all states except the big Western one, wasn’t designed for either a high penetration of renewables or for aging coal power stations becoming increasingly unreliable.\u00a0 It also wasn’t designed for a climate that is becoming more extreme.\u00a0 As a result, power companies don’t regard providing enough dispatchable generating capacity to meet demand under severe conditions to be profitable.\u00a0 As a result, a new market for extra “emergency<\/a>” generation has been added on top of the old market.\u00a0 While this is probably far better than doing nothing, it does make me wonder if there were easier options than privatization for doubling the cost of electricity.<\/p>\n

By getting the virtual power plant underway, South Australia not only gets a type of generation that has excellent characteristics for keeping the grid stable, but if there is a grid failure, homes with the Powerwalls installed will still have power.\u00a0 Because the batteries will be used to buy and sell energy, it is possible for them to be flat when a blackout occurs, but on average a battery will usually have at least some charge. Storms can also be predicted and charge levels topped up from the grid in anticipation of winds that can down power lines.<\/p>\n

Reasonable Benefits For Participants<\/h2>\n

The SA government says households that are part of the virtual power plant will see savings in their electricity bills of around 30%.\u00a0 They also say that even if electricity prices and solar feed-in tariffs fall, people will still see a reduction in their electricity bills.\u00a0 Of course, if a typical household bought a 5 kilowatt solar system and a Powerwall 2 outright they would see a far greater drop in their electricity bills, so there is still a big chunk of change left over for running the scheme and profits for investors.\u00a0 But you might be wondering if there is enough, considering that I keep saying that batteries don’t pay for themselves yet.<\/p>\n

I’d say it’s likely to pay for itself.\u00a0 The virtual power plant has a number of advantages over private household ownership which includes being able to sell electricity for over $14 a kilowatt-hour when demand is high and to be paid to take electricity from the grid when prices go negative.\u00a0 And if it doesn’t pay for itself now, then it soon will as battery prices continue to fall.<\/p>\n

Some Issues<\/h2>\n

I hope the development of the virtual power plant goes well, but there are a few issues I am concerned about:<\/p>\n