Tesla virtual power plant in South Australia first to lift FCAS capacity to 10MW

Tesla’s first virtual power plant in South Australia – made up from the batteries installed in more than 2,000 local homes – has won regulatory approval to play deeper in the frequency control and ancillary services market, which has been a lucrative source of revenue and profits for the much bigger grid-scale Tesla big battery at Hornsdale.

News of its increase in capacity to 10MW was included in an update issued by the Australian Energy Market Operator this week. The Tesla VPP, managed by retailer Energy Locals, is not the only VPP in the market, but it is the biggest.

Tesla and Energy Locals have been approved for 10MW of capacity in all six of the FCAS contingency markets, which provide critical services to the grid, particularly in the event of a network, generator or big consumer trip. The VPP is not registered for the regulation FCAS markets.

The Tesla big battery, officially known as the Hornsdale Power Reserve, has made much of its near $100 million in revenue from the FCAS markets, and the other four big batteries in the grid have also done well out of this market.

However, the introduction of VPP into these markets is a new development. And the opportunity will grow bigger as more VPPs are added, and programs such as the Tesla VPP grow to up to 50,000 customers as part of the South Australia government Home Battery scheme, which is focused on supporting low income and state housing.

It recently announced the next stage of that project, adding another 3,000 public housing properties who would receive a 5kW rooftop solar and 13.5kWh Tesla Powerwall 2 battery system at no cost, and provides the household with a flat-rate electricity tariff priced 22% lower than the Default Market Offer, whether from the battery or the grid.

The VPP also includes private customers of Tesla and Energy Locals, who provide discounts on daily charges and energy fees in return for being able to access the batteries. They need access to 5kWh – the maximum discharge – for short periods to deliver the 10MW of FCAS capacity.

“In a world-first, home batteries will provide the grid stability services that South Australia has lacked since the closure of the Northern Power Station, to address the legacy of instability that we inherited,” energy minister Dan van Holst Pellekaan said in a statement at the time.

“This will deliver at a household level what we are also delivering through the 50% expansion of the big battery at Hornsdale Battery to address these legacy issues.”

Tesla and Energy Locals are not the only VPP to operate in the market. AGL has a smaller VPP – also in South Australia – registered for FCAS, but its capacity ranges from 2MW to 3MW.

Most of the FCAS supply – which amounts to more than 2,500MW – has been supplied by coal, gas and hydro plants, although big batteries at Hornsdale, Lake Bonney, Gannawarra and Ballarat are taking an increasing share. Two wind farms at Hornsdale, which like the Hornsdale battery are owned by Neoen, are also registered for some FCAS services.