How Tesla plans to boost South Australia's energy sector

Image credit: Tesla

Given the critical role energy plays in just about everything that happens in a city, it is no surprise that city leaders often start their smart city journey by making smart energy a priority. And this is because the success of a smart city relies on creating and supporting a smart energy system.

This exciting new ‘smarter’ energy system proposed for implementation in South Australia will deliver many benefits due to its ability to store energy and balance the load on the grid. Improving reliability and resilience, creating new jobs, and lowering costs for citizens are just some of the benefits to be realised.

The world is now looking closely at South Australia as a global leader in grid-scale battery storage. Whilst many direct benefits will be realised in terms of energy cost saving, and reliability, it could be the indirect benefits from additional investment attraction in other sectors that might be the real legacy for the state. — Adam Beck


Tesla and French utility Neoen will build a 129MWh lithium-ion battery in South Australia as part of the state's $550 million energy programme, which was implemented after a state wide blackout in 2016.

The battery, which will be connected to a Neoen wind farm under construction near Jamestown, is intended to stabilize renewable energy delivered to the electric grid.

While Tesla CEO Elon Musk acknowledged during the announcement in Adelaide last week that there were technical challenges, he said he was "confident" in his company's ability to deliver the storage system. In fact, Musk was quoted in The Guardian as saying if his company failed to deliver the battery on time it would be free — and the contract calls for delivery within 100 days of signing. Musk noted that failure to complete the battery within that time would cost his company roughly $50 million.

"You can essentially charge up the battery packs when you have excess power when the cost of production is very low… and then discharge it when the cost of power production is high, and this effectively lowers the average cost to the end consumer. It's a fundamental efficiency improvement for the grid," Musk explained.

Grid-scale energy storage technology is taking on an increasingly major role in electric grid management because it can help prevent blackouts and price volatility, in addition to enhancing grid reliability.

South Australia Premier Jay Weatherill said "Battery storage is the future of our national energy market and the eyes of the world will be following our leadership in this space.

"This historic agreement does more than bring a sustainable energy giant in Tesla to South Australia, it will also have some significant economic spin-offs."

A string of power outages followed last year's state wide blackout, which made energy policy a contentious issue. The Australian Energy Market Operator said higher than expected demand for power was one of several factors that led to the blackouts.

Doug Peeples is a writer specializing in technology and energy. Follow @smartcitiesanz on Twitter.