Last week, we reported on Tesla’s Vice President of Energy products Lyndon Rive confirming that the company is in talks with local utilities to quickly deploy large-scale energy storage in Australia in order to address their current energy crisis.
CEO Elon Musk is now involved and they seem to have made progress over the weekend after talking with government officials.
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As we discussed last week, Musk promised Tesla could deliver over 100 MWh of energy storage in 100 days or it would be free.
The executive has since discussed the project with Australian Prime Minister Malcolm Turnbull and with Jay Weatherill, Premier of South Australia, the state most affected by the energy crisis.
They appear to be seriously considering deploing energy storage at an unprecedented scale.
Musk tweeted about both conversations and representatives from both government officials said that they planned to keep the channels of discussion open:
Tesla’s bid to quickly deploy storage took Australian media and social media by storm and keeps making headlines in the country since last week.
Mike Cannon-Brooke, the billionaire co-founder Atlassian, has been raising funds to help finance the energy storage projects and while he was first talking about 100 MWh, he is now talking about 1 GWh of storage projects:
That is a huge amount to deploy, but now several other companies want their share of the new demand.
Two local companies, ZEN Energy and Lyon Solar, have now both claimed that they could deliver 100 MWh+ in just 100 days, like Tesla.
The timing is an important part, which is why they are mainly considering battery storage. There’s an off-river pumped hydro energy storage project underway, but it’s not planned to be ready until 2020 and it’s right now that the country is having blackouts.
A quick 100 MWh would help prevent power outages during hot days in South Australia and up to 1 GWh would go a long way in stabilizing the grid before next summer.
If those other companies can deliver on time it would be great, but they also need to be competitive on pricing and if this whole ordeal has shown one thing is that people don’t understand the price of storage.
The Australia Financial Review wrote when talking about competitors trying to match Tesla’s price:
“They will have to match Tesla’s pricing, after Mr Musk quoted a low $US250 per KWh late on Friday, equal to $US25 million per 1000 MWh and half the rate cited by Tesla executives only a day earlier.”
As we reported last week, Rive said that the price of Tesla’s projects vary from $400 to 600 US per kWh depending on the configuration, or about $50 million per 100 MWh project.
Musk has since reiterated the price of $250 per kWh for 100+ MWh projects, but he specified that it is only at the “pack level”, which means the battery packs (Powerpack 2) only. The cost of the inverters (and you need a lot of them for a project this size) and logistics and installation are not included.
Therefore, those two comments don’t necessarily contradict each other and a 100 MWh project will cost all-in a lot more than $25 million.
South Australia Premier Jay Weatherill is expected to announce his action plan for the energy crisis this week and following those recent developments, it wouldn’t be surprising if it ends up including request of proposals for large energy storage in order for Tesla and other battery companies to formally submit quotes.