By Aman Shah
Power plants—also called generating stations or generating plants—are an industrial facility for the electric power generation which contain one or more generators. However, even more interesting is the question of what virtual power plants are. Do they generate electricity or some other output?
Tesla has agreed to build what will become the world’s largest virtual power plant. This modern marvel will be made by rolling out solar panels and electric batteries to 50,000 homes in the island nation of Australia.
What is a virtual power plant?
A virtual power plant is a cloud-based system that has power generators at different locations and it stores energy at different locations. The owner of this energy can be an individual, a group or the government. The sources often form a collection of different types of dispatchable and non-dispatchable loads, controllable or flexible loads, along with distributed generation (DG) systems that are controlled by a central authority.
In simple terms, there are numerous sources of energy with a specific owner and a manager. A part of the energy produced is used by the owner himself for household or commercial purposes. The rest of the energy is sold to the market. Virtual power plants already exist in the United States, Europe, and Australia.
Australia is a glowing example
The South Australian government is aiming to connect at least 50,000 houses with the system. This project includes giving each household a 5kW-rooftop solar panel as well as a 13.5kWh Tesla Powerwall 2 Battery System. This plan was initiated with a test-run in 1,100 Housing Trust properties. Housing Trust is an authority established by the government of South Australia and is responsible for providing low-cost rental housing to working people and their families. The trial-run was started here to provide free energy to the neediest.
Following the success of this trial run, the government decided to install such systems in 50,000 households over a span of 4.5 years, which also includes 24,000 Housing Trust properties. The system has been implemented, with the state government assisting the rollout with a $2 million grant and a $30 million loan from the Renewable Technology Fund. This project does not cost a penny for the tenant. The system will be allocated to the household on a first-come-first-serve basis, and registrations have already begun.
This virtual power plant will be privately owned and operated—the process for financing the majority of the costs of the program will commence late in this year. Elon Musk-led Tesla Inc. is responsible for the installation of the systems and will coordinate directly with the households. Once the systems are operational, most on-going communications regarding the virtual power plant will be made through the program retailer. Tesla and the South Australian government will be fixing a retailer from the market to be a part of the project as the official Program Retailer. This retailer engagement process will be in place from mid-2018. Electricity and all communications regarding bills will be carried out through this Program Retailer.
How much money will it save?
The households will be provided with the 5kW solar panel and 5kW-13.5kWh Powerwall 2 home energy system with a smart meter. This system will generate power during the day. During the daytime, the solar panels will produce more power than a household can ever consume. Extra power can be used at the night time. Tesla’s app will show the power consumption of a house.
In Australia, the average daily power consumption for a house is 16kWh or16 units. The provided system is capable of producing 5kWh in an hour of full daylight. The rest of the power may be used for commercial purposes. Analysis by the Frontier Economics shows that the virtual power plant is expected to lower energy bills for participating households by 30%.
Participation of Tesla Inc.
Tesla Inc. is known for its specialisation in electric automotive, energy storage, electric cars, lithium-ion battery energy storage, and residential photovoltaic panels. It is based in Palo Alto, California. The additional products that Tesla sells include the Tesla Powerwall and Powerpack batteries, solar panels, and solar roof tiles. In the current project, the government will be using Tesla’s specialised products. In February 2016, Tesla battery costs were estimated at US $200 per kWh. Tesla indicated later, in 2016, that their batteries cost less than $190/kWh. It was noted that during a blackout if the batteries were charged, the households would not lose power, but be able to operate their lights and appliances from the battery.
The key objectives of the virtual power plant are to provide significant cost savings to consumers and to demonstrate the ability of a virtual power plant to deliver savings to households and improve the resilience of the grid. Moreover, it will introduce competition into the South Australian energy market, placing downward pressure on energy prices, and establishing a new, dispatchable renewable energy power plant, providing energy when it is most required.
Tesla won the bid for the project in July 2017. The move came just two months after Tesla decided to switch on the world’s biggest lithium-ion battery to help stabilise Australia’s shaky power infrastructure. The South Australian state has expanded in the field of wind-power a lot faster than the rest of the country. However, the state has still faced numerous blackouts in the recent months.
Challenges and opportunities
South Australian power grids have sufficient power production for the population and also have recently started exporting electricity. However, the problem revolving around the situation is much worse. Australia has been facing immense heat waves in the recent years. The power grids of Australia have been facing overload due to heat. Tesla’s solution to the problem may seem effective but the problem is far too different from this.
Australia’s major production of the electricity comes from coal. Even then, only 2% of the electricity generated is from rooftop solar panels. The proposition to transform Australia into a renewable energy-dependent country in a span of some years has been commented to be a “Hollywood Solution” by the opposition.
What is to be seen is Tesla’s motive in this project. Tesla’s motive could be just the profits. However, the company has proven otherwise in the past, when it offered help to the government during the Puerto Rico disaster in 2017. Also, one needs to see how truthful will the claims be when the projected is implemented. It can be seen as a great model example for other countries to follow.
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