On Sunday, the Australian government announced its partnership with Tesla to create a virtual power plant.

Elon Musk‘s 100-megawatt, 129-MWh battery installation project in South Australia won him much favor. In fact, the Australian government announced a new partnership with Tesla to further boost the state’s power infrastructure.

On Sunday, South Australian Premier Jay Weatherill announced the provinces’s plan to work with Tesla to turn 50,000 Australian homes into the world’s largest virtual power plant.

Read More: Elon Musk Wins Bet by Constructing the World’s Biggest Batteries in 100 Days

The project will involve the distribution and installation of 5kW solar panels along with Tesla Powerwall 2 batteries into every household. This will enable homes to not only power themselves but also contribute their surplus energy to the power grid. The initiative is expected to reduce blackouts in the area and significantly reduce a recent surge in energy prices afflicting the province.

@ElonMusk has landed another deal with South Australian government. #Tesla is all set to build the world's largest virtual power plant by connecting some 50,000 households in the state.Click To Tweet

According to Weatherill, the network of solar panels linked to Tesla’s rechargeable batteries will be provided for free by the government. It will be financed by the sale of excess electricity produced by the network.

“My government has already delivered the world’s biggest battery, now we will deliver the world’s largest virtual power plant,” Weatherill said in a statement.

South Australia's virtual power plant plan
South Australia’s virtual power plant plan | South Australian Government

South Australia’s Virtual Power Plant Project

The virtual power plant project will first be tested over the next few months. 1,100 public Housing Trust homes will have solar panels and Tesla batteries installed. Participating households will not carry up-front charges with the government funding the initial trial.

Reports said that officials would provide an AUD 2 million grant (USD #1.6 million) together with an AUD 30 million (USD #23 million) loan from the state’s Renewable Technology Fund. After completing the necessary trials, the program would be rolled out to another 24,000 houses. If this is successful, other households would then be open to joining the initiative with the ultimate goal of connecting at least 50,000 homes in Adelaide to the virtual power grid.

If the project goes as planned, officials claim that it would to create a virtual power plant able to produce over 250-megawatts of electricity. This would result in a 30% energy reduction in the electricity bills of participating homes.

“We will use people’s homes as a way to generate energy for the South Australian grid, with participating households benefiting with significant savings in their energy bills,” Weatherill went on to say. “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.”

Elon Musk and Jay Weatherill during yesterday's conference
Elon Musk and Jay Weatherill during yesterday’s conference | ABC: Michael Coggan via The New Daily | thenewdaily.com.au

The government said that registration will soon be opened for homeowners who want to take part in the project. Furthermore, a notice will be released to the market this week to seek a potential retailer that will deliver the program.

“Virtual power plants allow families to take control of their power bills, while providing greater security for the energy network,” Smart Energy Council chief executive, John Grimes, said regarding the power plant initiative.

However, with South Australia’s upcoming election next month, Weatherill’s strategy has been under attack by Australian Prime Minister Malcolm Turnbull. In a statement, the Australian PM called the initiative a reckless experiment. He further asserted that the plan can only result in a surge in energy costs.

“The families and businesses of this state know they cannot afford another four years of Labor,” Turnbull said. “South Australia cannot afford another four years of reckless experiments.”

What can you say about South Australia’s move to create a virtual power plant? Do you think that our government should invest more in this kind of renewable energy initiative?

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