What is being called the world's largest residential virtual power plant (VPP) has gone live in suburban Adelaide, where reliability of power supply is the dominant public policy issue.

The VPP is an initiative of power company AGL and involves solar panels and battery storage at hundreds of properties being linked together to form a five-megawatt virtual solar power station.

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"Our South Australian VPP demonstration is a practical example of the new energy future," AGL's managing director and CEO Andy Vesey said.



"We believe the VPP will deliver benefits … .by providing another source of generation to deploy into the network."

He said the environment would also benefit from reduced emissions.

AGL said the Federal Government, through the Australian Renewable Energy Agency (ARENA), was providing up to $5 million to support the $20 million project.

The project is different to standard home battery storage because the batteries' operation can be directed remotely.

As well as being used to help power the home they are in, they can also be directed — all at once — to service the grid when overall system stability or reliability is under pressure.

In a fiery news conference at the launch, Federal Energy Minister Josh Frydenberg and SA Premier Jay Weatherill traded blows over the state's plans to "go it alone" on energy supply.

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The virtual power plant is being rolled out in three phases over about 18 months.

AGL said 1,000 batteries were expected to be deployed across metropolitan Adelaide by next year.

South Australia has been plagued by unreliability in its electricity system.

This week it was revealed that there was almost a second statewide blackout this month, similar to the one which plunged the state into darkness for hours in September 2016.

The 2016 outage happened when severe weather knocked out three transmission lines and 22 towers.

The near-repeat performance this month involved the loss of 610MW of generation caused by a voltage transformer exploding in a switching yard, tripping generators at two of Adelaide's biggest gas-fired power stations, Torrens Island and Pelican Point.

While there was no load-shedding, the energy market operator said South Australia's power system "was not in a secure state" for 40 minutes after the fault.

AEMO said the incident almost tripped the Heywood interconnector, which imports power to SA from Victoria.