Tesla’s first virtual power plant in South Australia – made up from the batteries installed in more than 2,000 local homes – has won regulatory approval to play deeper in the frequency control and ancillary services market, which has been a lucrative source of revenue and profits for the much bigger grid-scale Tesla big battery at Hornsdale.

News of its increase in capacity to 10MW was included in an update issued by the Australian Energy Market Operator this week. The Tesla VPP, managed by retailer Energy Locals, is not the only VPP in the market, but it is the biggest.

Tesla and Energy Locals have been approved for 10MW of capacity in all six of the FCAS contingency markets, which provide critical services to the grid, particularly in the event of a network, generator or big consumer trip. The VPP is not registered for the regulation FCAS markets.

The Tesla big battery, officially known as the Hornsdale Power Reserve, has made much of its near $100 million in revenue from the FCAS markets, and the other four big batteries in the grid have also done well out of this market.

However, the introduction of VPP into these markets is a new development. And the opportunity will grow bigger as more VPPs are added, and programs such as the Tesla VPP grow to up to 50,000 customers as part of the South Australia government Home Battery scheme, which is focused on supporting low income and state housing.

It recently announced the next stage of that project, adding another 3,000 public housing properties who would receive a 5kW rooftop solar and 13.5kWh Tesla Powerwall 2 battery system at no cost, and provides the household with a flat-rate electricity tariff priced 22% lower than the Default Market Offer, whether from the battery or the grid.