Elon Musk shocked the world when he had Tesla (NASDAQ: TSLA) build a 129-megawatt power storage facility for Australia last year -- and did it in just 100 days. (Sort of.) But if you thought that was impressive, just wait.

Musk's latest plan to help solve Australia's perennial power crisis involves roping 50,000 South Australian homes together to form a 250 MW "virtual power plant" that will both create electricity and store it for when it's needed. When complete, this latest Tesla initiative will create a power plant that is practically invisible, because it won't need a large facility to house it.

Here's how he plans to do it:

Hand holding a lit light bulb whose top has dissolved into interconnected points of light.

Tesla's idea: What if it could build a power plant without building a power plant building? Image source: Getty Images.

Virtual power plants -- real power

The state of South Australia describes the plan thusly: In phase 1 of the project, Tesla has already begun installing 5 kilowatt solar panel systems and 13.5 kWh Tesla Powerwall 2 batteries (to store the electricity generated by the solar panels) in 1,100 Housing Trust rental properties across the state. This phase will run through 2019, at which point phase 2 will begin.

In phase 2, which will take a further two and a half years to complete, the project will be rolled out to another 24,000 Housing Trust properties. It will double in size in phase 3, encompassing a total of 50,000 households -- Housing Trust and otherwise -- across the state. Installations in privately owned homes will begin in 2019.

The idea is for each household to generate and store "a significant proportion" of the power needed to run itself, drawing upon the grid to cover any temporary shortfalls. At the same time, any excess power generated would be "centrally controlled" and available "to meet the needs of the grid" as a whole.

Once complete, the virtual power plant should be capable of meeting "around 20% of South Australia's average daily energy requirements," and sufficient to power about 75,000 homes -- which you'll note is 50% more than necessary to cover the homes that will participate, providing a wide margin of safety.

Real power, and real savings

Participants in the program will pay no up-front fees. Rather, the electricity generated by their panels will be sold to generate revenue to pay for the project's costs. Thus, the business model envisioned resembles the original model of Tesla's SolarCity subsidiary. South Australia is also putting plans in place to permit homeowners to purchase their solar panels and Powerwall batteries outright.

A study by consulting firm Frontier Economics estimates that Tesla's new virtual power plant will save South Australian households 30% of their current electricity costs. (That's measured against an estimated average cost today of AU$0.40 per kilowatt-hour, or $0.31 U.S., with the Australian dollar worth $0.78 U.S.)

To accelerate these savings, the South Australian government is subsidizing the program's estimated AU$800 million total cost with an AU$2 million grant and an AU$30 million loan, and relying on investors to cover the rest of the cost. 

What it means to Tesla -- and Tesla investors

South Australia will contract with a third-party retailer to manage the program and to handle billing once the equipment has been installed. Tesla will produce both the panels and the batteries for this project, and will also handle installation. With no need to build a big facility to host its solar panels or batteries, moreover, it appears that the vast majority of the AU$800 million cost of this project will be going to Tesla.

That's more than half the annual revenue that Tesla's Energy Generation and Storage division produced last year -- all from just one project. It's more than 5% of all revenue that Tesla generated last year, including from the company's flagship electric car business -- again, all from just one contract.

While it remains to be seen how profitable (if at all) this project will be, the revenue growth potential alone makes Tesla's latest contract from Australia a big win for the company -- and a great way for Tesla to kick off 2018.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.