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It's a PR pitch too good to be true.
A global battery giant launches two new products in Australia, declaring one of those products could be the solution to a power crisis engulfing South Australia.
Within 48 hours, the global tech guru chief executive of said battery company pledges on social media to deliver a solution in 100 days, or provide it for free.
Social media goes nuts, as social media does. And before long, it seems South Australia's unreliable power problems might be solved via a trans-Pacific Twitter deal between billionaires.
Politicians scramble for Elon Musk's number, eager not to miss the opportunity to genuflect before a global tech deity with more Twitter followers than they could ever hope to match.
But before we all get carried away, it's worth pointing out that Tesla's fix for SA's power problems probably won't eventuate. Here's why.
Tesla isn't the only company proposing a battery fix
They don't have the celebrity figurehead of Elon Musk, but there are already several companies proposing big battery solutions for South Australia. And some of their proposals are already well advanced.
Zen Energy, chaired by the Rudd government's carbon-pricing tsar Ross Garnaut, has been working on plans for a battery storage of up to 150 megawatts (MW) at Port Augusta.
Lyon Solar wants to build 200-250 MW of large-scale batteries in several projects around the state.
And that's just the start.
Tesla is late to the party
The South Australian Government has already dangled a sizable carrot to the power market to try to encourage both a new source of electricity generation and a new source of dispatchable renewable energy.
Last year, it issued a tender for supply of 75 per cent of the Government's own electricity usage for a new market entrant, and another for the remaining 25 per cent to come from dispatchable renewables (batteries or another storage solution).
Those tenders have since closed, which means if the Government were to field offers from a new player — say Tesla — it could run into probity problems.
There is money for storage options from the Federal Government currently on the table, via the Australian Renewable Energy Agency.
But that brings us to the next problem.
Tesla is a battery company, not an energy company
South Australia's electricity generation and transmission are privatised.
Unless that changes, it's up to the market to decide whether a new power station or storage system gets built.
While Elon Musk is offering to build a battery system, he's not offering to run it.
That means a new or existing player in the market would need to find the finance to buy the battery system off Tesla, then make a buck by selling the power into the grid.
That is, unless governments intervene and own the batteries outright.
It's worth noting that Tesla batteries are already being subsidised in some households through a 'virtual power plant' being trialled by distribution company SA Power Networks.
But that's a different model to the battery farm idea proposed by Tesla for South Australia last week.
Market rules make it hard for batteries to stack up right now
Battery technology is rapidly advancing and prices are declining dramatically.
But there are reasons why no companies have so far actually built grid-scale storage in South Australia.
The state's biggest power provider, AGL, told a Senate Committee last week that it has spent the past month trying to build an economic case for batteries.
AGL says under current market rules, they don't stand up without subsidy.
Part of the problem is the way the National Electricity Market works.
Generators bid offers of electricity into the system every five minutes at prices up to the maximum $14,000 per megawatt hour (MWh). Power is dispatched from generators in order of lowest price to highest.
The highest-priced generator switched on in order to meet the total demand sets the price paid to all the generators. But while the prices are set every five minutes, the amount actually paid to the generators is averaged out over half an hour.
This half-hour price averaging assists generators which take time to wind up (gas plants) but isn't particularly helpful for technology which can provide an immediate, but short-term response (batteries).
In addition to this wholesale power market, the Australian Energy Market Operator runs a separate market for what it calls Frequency Control and Ancillary Services.
This is the purchase of power in smaller quantities needed to balance out the grid, keep it stable and to prevent statewide blackouts. Batteries could be really helpful in this space, but their advocates say there needs to be a change in the way these markets are structured.
Both issues are being examined at a national level, and changes are likely. But they haven't happened yet.
Tesla's solution may not be enough
In response to South Australia's power problems, Tesla has been talking about a battery array capable of storing somewhere between 100 and 300MWh. While that's a measure of storage, the actual output of these batteries isn't clear.
The example Tesla used in its pitch, an 80MWh battery array in southern California, outputs energy at 20MW.
For context, when South Australia ran short of power on a hot day last month, the Australian Energy Market Operator ordered 100MW of electricity demand be switched off.
Zen Energy estimates a battery output of 100MW would be needed to prevent such load-shedding blackouts, and up to 150MW would be needed to provide the sort of grid stability issues that caused a statewide blackout last year.
That's not to say Tesla's idea wouldn't help, or that it couldn't provide more batteries. But it is worth bearing in mind when we're talking about a system "fix" at a certain price.
So what will happen?
Batteries will happen. It's just a question of when.
Some of the proponents think they'll be up and operating in time for next summer, when potential power shortfalls have been predicted across South Australia and Victoria.
Yes — it is too early to write off the Tesla proposal entirely. But it's worth noting they'll need a customer — either an energy company, or a government.
Both of those entities have known about Tesla's batteries for a while now. Yet as far as we know, none of the developed proposals are based on Tesla's proprietary technology.
If nothing else — the intervention of Elon Musk has done one thing. It's crystallised the idea of grid-scale battery storage in the public's mind — and that's only going to help those who've been pitching it as a fix for some time.
Topics: electronics, electricity-energy-and-utilities, solar-energy, science-and-technology, federal---state-issues, sa
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