The prospects for Tesla’s proposed 250MW “virtual power plant” in South Australia look significantly brighter after the success of its first trial and an enthusiastic response from the South Australia government.

So far, some 100 Housing SA homes have received their 5kW of rooftop solar and the 13.5kWh Tesla Powerwall batteries, with another 1,000 homes to receive solar and battery storage under an agreement locked in by the previous state Labor government.

The original plan was to install a total of 50,000 Housing SA and low-income homes with solar and storage, slashing bills for those homes by around 30 per cent and creating a 250MW “virtual power plant” that could be used to boost security and reliability on the state’s grid.

The fate of the third phase – which will rely on private finance, and the emergence of another retailer – was clouded when the Liberal state government won the state election in March, and said then it would favour its own proposal of giving subsidies in the form of grants for battery storage to 40,000 homes.

An announcement on the $100 million grants for 40,000 homes is expected in coming months, but it now seems clear that the new government is interested in doing both – a result that would see at least 90,000 subsidised and supported battery storage installations across the state.

There are also ongoing talks about a different scheme proposed by German manufacturer sonnen, which could see another 10,000 batteries brought into the market.

In a statement on Sunday, the state government hailed Tesla’s first VPP trials for “delivering cheaper energy to South Australians who need it most”, and increasing the reliability of the state’s energy network.

The results of those trials conducted by Tesla – obtained by RenewEconomy – show that groups of Tesla Powerwalls installed in homes can deliver much of the same services as the Tesla big battery in South Australia, such as providing rapid and accurate response to frequency changes.

This graph below shows how two Tesla Powerwalls (red and green), respond to so-called “droop settings” by autonomously and automatically injecting active power when the frequency (blue line) drops below the thresholds (dotted lines).

“This response demonstrates the ability of the SA VPP to autonomously and instantaneously provide frequency services that help maintain the stability of the grid,” the Tesla document says.

The South Australia government acknowledged this, saying that Phase 1 of the Tesla VPP (100 homes) demonstrates that distributed Powerwall technology can increase the supply of energy during peak periods.

It says this would increase reliability and cut prices in South Australia and “when paired with solar and wind” generate clean renewable energy.

“This program is already delivering participating South Australians significantly reduced electricity bills,” energy minister Dan van Holst Pellekaan said.

“The Marshall Government has always highlighted the critical need for more storage to increase security and lower expensive peak costs.

“The final rollout phase (Phase 3) is subject to the success of the trials, the financing of the program by the private sector, and the satisfaction of both Tesla and the Government in the final program design.”

“In addition to this program, we will also be announcing details of our $100 million Household Storage Subsidy Scheme to deliver 40,000 more home batteries in the coming months.”