At least 50,000 South Australian homes will be given solar panels and batteries in a scheme by Elon Musk’s Tesla and the SA government to build the world’s largest virtual power plant, slashing household power bills in the process.

Under the deal unveiled by Premier Jay Weatherill, solar systems and batteries will be supplied and installed free of charge.

The cost of the project will be financed through the sale of electricity, generated by the panels, in what Mr Weatherill said would be the largest project of its kind.

The government will this week issue an expression of interest for a retailer to deliver the program, with the intention of bringing additional competition to the market.

The retailer will have the right to tap output of the household batteries and solar panels to supply power to the grid.

A trial of the scheme in 1,100 Housing Trust properties has already begun.

Following the trial, a further 24,000 systems are set to be installed in Housing Trust properties.

A similar deal would then be offered to all South Australian households, with at least 50,000 systems to be installed within four years.

“We will use people’s homes as a way to generate energy for the South Australian grid, with participating households benefitting with significant savings in their energy bills,” Mr Weatherill said.

The scale of the project will eclipse Canberra’s Reposit Power Virtual Power Plant, which connects 250 homes and businesses to the grid, as well as similar schemes by AGL and SA Power Networks.

Mr Weatherill said analysis by Frontier Economics showed the 250 megawatt system in South Australia would lower energy bills for participating households by 30 per cent.

“More renewable energy means cheaper power for all South Australians,” Mr Weatherill said.

“My government has already delivered the world’s biggest battery. Now we will deliver the world’s largest virtual power plant.”

Just like the 100-megawatt lithium ion battery already installed near Jamestown in the state’s Mid North region, the virtual power plant scheme is the result of a contractual arrangement between Tesla and South Australian taxpayers.

“What this project will do is connect thousands of solar and battery systems to make one giant, coordinated virtual power plant,” Energy Minister Tom Koutsantonis said.

The government will assist the rollout of the virtual power plant scheme with a $2 million grant and a $30 million loan from the Renewable Technology Fund.

The Minister for Social Housing, Zoe Bettison, said the decision to install the systems in Housing Trust homes would assist the most vulnerable.

“We know that people in social housing can often struggle meeting their everyday needs and this initiative will take some pressure off their household budget,” she said.

Liberal Opposition Leader Steven Marshall has already pledged means-tested grants averaging $2,500 to facilitate the installation of batteries in 40,000 homes.

SA Best Leader Nick Xenophon has promised to unveil an energy policy in coming weeks.

-ABC