At least 50,000 homes in SA will be given solar panels and batteries in a scheme by Elon Musk's Tesla and the SA Government to build the world's largest virtual power plant, slashing household power bills in the process.

Under the deal unveiled by Premier Jay Weatherill ahead of the March state election, solar systems and batteries will be supplied and installed free of charge.

The cost of the project will be financed through the sale of electricity, generated by the panels, in what Mr Weatherill said would be the largest project of its kind.

The Government will this week issue an expression of interest for a retailer to deliver the program, with the intention of bringing additional competition to the market.

The retailer will have the right to tap output of the household batteries and solar panels to supply power into the grid.

A trial of the scheme in Housing Trust properties has already begun, with the first 100 homes to receive the systems by June 30, and another 1,000 over the following year.

The SA Government wants at least 50,000 battery and solar systems installed within four years. ( Supplied: Murray Green )

Following the trial, a further 24,000 systems are set to be installed in Housing Trust properties.

A similar deal would then be offered to all South Australian households, bringing the total to at least 50,000 systems to be installed within four years.

"We will use people's homes as a way to generate energy for the South Australian grid, with participating households benefitting with significant savings in their energy bills," Mr Weatherill said.

"More renewable energy means cheaper power for all South Australians."

The scale of the project will eclipse Canberra's Reposit Power Virtual Power Plant, which connects 250 homes and businesses to the grid, as well as similar schemes by AGL and SA Power Networks.

The Government said analysis by economic consultancy firm Frontier Economics showed the 250 megawatt system in South Australia would lower energy bills for participating households by 30 per cent.

"The biggest saving for consumers is that they don't have to pay for as much network cost to deliver power to them because they're generating their own power," Frontier Economics managing director Danny Price said.

"The next biggest scheme is in South Australia — the AGL 1,000 household scheme. That's still being developed, this is 50 times bigger.

"In principle, it's quite simple technology. It just requires a smart computer system to stitch it all together."

The Government made the announcement at Salisbury North alongside local Housing Trust tenant Des Jenkins, who lives with his wife and grandchildren and currently pays about $900 for power every three months.

Tesla's lithium ion battery alongside the Hornsdale windfarm near Jamestown began dispatching power last year. ( Telsa Motors: Timothy Artman )

Mr Jenkins was the first in the state to receive the new battery and solar system, and said it would save him about $300 per quarter.

"We're using a dishwasher which we couldn't use before, air-conditioning which we couldn't use because we couldn't afford it," he said.

"That's $300 more you've got in your pocket to deal with grandchildren, phones, day to day stuff, extra food on the table. It just makes life easier."

Just like the 100-megawatt lithium ion battery already installed near Jamestown in the state's Mid North region, the virtual power plant scheme is the result of a contractual arrangement between Tesla and South Australian taxpayers.

"What this project will do is connect thousands of solar and battery systems to make one giant, coordinated virtual power plant," Energy Minister Tom Koutsantonis said.

The State Government will assist the rollout of the virtual power plant scheme with a $2 million grant and a $30 million loan from the Renewable Technology Fund.

The Minister for Social Housing, Zoe Bettison, said the decision to install the systems in Housing Trust homes would assist the most vulnerable.

"We know that people in social housing can often struggle meeting their everyday needs and this initiative will take some pressure off their household budget," she said.

Liberal Opposition Leader Steven Marshall has already pledged means-tested grants averaging $2,500 to facilitate the installation of batteries in 40,000 homes.

SA Best Leader Nick Xenophon has promised to unveil an energy policy in coming weeks.