Aussie business disappointed over Tesla deal with South Australian government

LOCAL entrepreneurs have been left disappointed over Elon Musk’s deal with the South Australian Government to deliver the world’s largest virtual power plant.

At least 50,000 homes will have a free solar and battery system installed under the plan announced on Sunday and it has already attracted a lot of interest from the public.

Homeowners will have to pay for the power produced by the systems but this is estimated to be about 30 per cent less than current prices for electricity.

South Australian Premier Jay Weatherill said on Monday more than 6500 people had already registered an expression of interest in being part of the program.

While the plan has been welcomed, Sydney business partners Alex Georgiou and Jin Woo Kin were disappointed to hear the government had chosen to work with Tesla, instead of a local company, to deliver the project.

Their fledgling business, ShineHub, began offering a “fixed rate, free access” plan in South Australia last November. “It’s very similar, if not identical, to Musk’s,” Mr Georgiou told news.com.au.

Unlike Mr Musk’s plan, which is being rolled out to Housing SA properties first and won’t be available to private homeowners until about July 2019, Mr Georgiou said ShineHub was already delivering systems to South Australians.

VIRTUAL POWER PLANT FOR 50,000 HOUSEHOLDS

“The main difference is ours is not government funded, it’s a commercially viable product, it’s not a government-propped up product,” Mr Georgiou said.

ShineHub has partnered with an international financier that provides the initial funds needed to buy and install the systems. Homeowners pay off their systems off over 20 years by purchasing the electricity the panels produce.

But the Tesla project is being financed by the state government, which is providing a $2 million grant as well as a $30 million loan from the Renewable Technology Fund.

It hopes to get at least 50,000 households signed up — about half will be private homeowners and the rest will be public housing tenants — and this will allow it to create a virtual power plant to generate 250MW of electricity when combined.

In comparison, ShineHub is relying on partnerships with community organisations like the Smart Energy Council, Conservation Council SA and Trees for Life to get people interested in its product, with about 70 people now signed up.

At this stage, ShineHub does not have enough households signed up to create a virtual power plant but hopes to start doing this by August.

Delivering this type of project is not easy. Last year, AGL delayed its $20 million program, partly funded by the Australian Renewable Energy Agency, to create a virtual power plant of 1000 households. It offered discounted systems costing about $3500, but the program is now on hold while the company reviews its technology.

FREE SOLAR PANELS AND A BATTERY

An AGL spokesman told news.com.au that it planned to introduce a new, next-generation battery technology to its next round of installations.

“AGL has not yet announced the details of the technologies to be offered to consumers, but last year decided to cease installations to give customers the opportunity to make an informed decision about waiting for a next generation unit,” he said.

While the Tesla project appears great for the industry and a positive step for Australia’s future in renewables, Mr Georgiou said he had mixed feelings it.

“The bit that was disappointing was the closed process with an international supplier for a product that is not even ready yet,” he said.

But a spokesman for Mr Weatherill said 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,” he said.

“One of the unique aspects of this proposal is the provision through a program retailer of cheaper electricity to all Housing Trust tenants regardless of whether they have a system installed on their home.”

In the meantime, Mr Georgiou said South Australians did not have to wait for Tesla’s plan to get free solar panels and a battery.

“If they are interested in a plan, it’s available now and there no restrictions,” he said.

HOW DOES IT WORK?

Mr Georgiou believes ShineHub is the only business in Australia currently offering a “fixed rate, free access” plan for a battery and solar panel system.

Customers can chose panels and batteries from a selection. This used to include Tesla’s Powerwall 2 battery, but Mr Musk’s company has now informed ShineHub it won’t be able to supply these batteries in the near future.

Customers sign a 20-year contract to buy electricity at a fixed rate. At the moment, this is about 30c per kWh, roughly 30 per cent cheaper than current electricity costs in South Australia. The price will not change over the next 20 years.

At the end of the contract, the panels and battery are yours to keep for the cost of $1.

ShineHub takes care of all the maintenance over the 20 years and the battery will likely have to be replaced after about 10 to 15 years depending on the brand (at no cost to you).

You may get another few years of free electricity out of your system once the contract ends and before the battery needs to be replaced again.

ShineHub also offers a package for renters and landlords that allows landlords to sign up for free panels and batteries so renters can benefit from cheaper electricity prices.

Homeowners are also able to break the contract and pay a buyout price for the systems, which they may want to do if they sell their house.

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