Just a few months after Tesla completed the world's biggest lithium-ion battery installation outside of the Hornsdale wind farm in South Australia, the Australian state and the electric vehicle-slash-energy company look like they're ready to partner again.

This time, South Australia wants to build a 250MW virtual power plant. The plant will consist of thousands of solar panels and batteries running software that decides when the batteries charge and discharge to maximize efficiency and value to the grid.

The buildout will start with 1,100 public housing properties. Residents sign up if they're interested in the program, and a Tesla contractor comes out to the home and tries to outfit a solar and battery storage solution to the house in question.

The installation of these systems has already started, and the government of South Australia said installation would continue through 2018 to 2019. If the trial goes well, another 24,000 Housing Trust homes will be included in the virtual power plant (residents may opt out, however).

If all goes well after the second phase of the rollout, another 25,000 private South Australian households will have the option to buy into the system. Installations at public housing will be provided at no cost to the resident, but pricing for private residents hasn't been disclosed yet.

The "virtual" aspect of this distributed generation scheme comes into play as the systems' software decides when to store energy in the accompanying 13.5kWh Powerwall and when to sell it back to the grid. But homes will still have to pay for the electricity they consume whether it's from the solar setup on their house or from the grid.

Per a Frequently Asked Questions page on the Virtual Power Plant: "All electricity consumed by the household (whether from the energy system or the grid) will be metered and charged for through the household electricity bill. The benefit for the household in being a part of the virtual power plant is that it will be charged a significantly reduced rate for its electricity use."

The Premier of South Australia, Jay Weatherill, said in a press release that the systems should save participants up to 30 percent on their energy bills.

Such a highly automated system could have benefits for grid managers. Rather than incurring the costs of independently sourced distributed generation as more and more households take themselves offline during the day and then quickly come back on in the evening, the virtual power plant acts as utility-grade solar and storage. The government of South Australia says Tesla will initially liaise with households to install the 5kW solar panels and batteries, but ultimately a third-party retailer will take control of the operations and issue bills to customers.

Although virtual power plant participants can't go fully off-grid during normal operations, the panels and battery will work in a blackout. They'll do so by disconnecting from the grid and sending power exclusively to the residence where they're installed. Blackouts have plagued South Australia in recent years as heat and storms have become more and more disruptive to the energy system there.

Initial stages are being funded by various programs in the government of South Australia. According to the state's website:

The virtual power plant is being fast-tracked by a $2 million [AUD, USD $1.58 million] grant and $30 million [AUD, USD $23.65 million] loan from the Renewable Technology Fund. The total value of the project is currently estimated at approximately $800 million [AUD, USD $630.66 million] which will come from investors. Proposals under the Renewable Technology Fund were received through an open call for proposals in September 2017. The virtual power plant proposal by Tesla, in addition to a range of other projects, represented significant value and warranted investment by the Fund.

Much like with a traditional electricity-generation installation, investors would earn a return through electricity sold back to customers.

South Australia's current government has bucked many calls to keep its coal-fired generation on life support. Besides the massive Tesla battery project completed last year, South Australia also approved a 150MW concentrating solar plant from SolarReserve. Construction on that plant is supposed to be completed in 2020.