Billionaire’s gambit: Why we should accept Musk’s offer

SolarQuotes
Last Thursday in a trendy re-purposed Substation near Melbourne, Elon Musk’s cousin Lyndon Rive claimed he could solve SA’s energy woes in 100 days.
How?
By installing 100-300MWh of batteries.
Big Call.
A day later, via Twitter, Aussie tech billionaire Mike Cannon-Brookes asks Musk if he’s serious about “100MW1” of batteries in 100 days. Musk wagers he’ll deliver and install them in 100 days or it’s free.

What is Musk Actually Proposing?
Musk & Rives’ “solution to SA’s power woes” is “100 – 300MWh” of energy storage.
The batteries they want to use are the Tesla Powerpacks. These are are steel cabinets with 15 Powerwalls worth of batteries in each. A single power pack can provide 210kWh of storage, which can be punched out to the grid at a max power of 50kW.
So 100-300MWh of storage will come with a corresponding 23.8MW – 71.4MW of power.
In the scheme of things 23.8MW is not very much grunt. For context it’s about the same as 10 modern wind turbines operating at full power.
So I’m going to work with the upper end of Tesla’s offer: 300MWh and 71.4MW.
At what cost?
Musk later tweeted that Tesla don’t do ‘mate’s rates’ but can do these batteries – to anyone buying over 100MWh – for US$250 per kWh.
That works out at a nice round $100 million AUD per 300MWh. But that’s at the factory gate. You still need to ship those 1500 x 1.6ton power packs to Australia (about a tenth of the capacity of a modern cargo ship or 20 x 747 cargo planes worth).
What is also not included in that $100 mil is the inverters, site works, cabling, installation, substations and commissioning.
My guess is that the total, installed cost could easily be double the headline cost of AU$100m. It is going to be installed by Australian labour, and have you seen the cost of Aussie tradies these days?
Will it work?
Depends what you mean by ‘work’.
Elon has promised to have it “working in 100 days or it’s free”.
As far as I’m concerned, ‘working’ should mean: ‘up and running and preventing any more blackouts in SA’.
But Elon is not crazy enough to make that promise. And he can’t, because 71MW of battery power is not enough to magically make the SA grid invincible.
What Elon has promised is that the batteries will be installed and commissioned in 100 days.
I have no doubt that, if Tesla send over their best engineers, they can get the batteries bolted down, wired, up and operational (although 100 days including shipping them from the US is ambitious).
So what will a fully operational 71MW Tesla battery do for the SA grid?
A large(ish) battery will definitely contribute to grid reliability. But the one proposed is too small to prevent all future blackouts – especially as wild weather becomes more frequent and fossil generation gets older and more fragile2.
Here’s what 300MWH/71MW of batteries can do:

  • Potentially help stabilise the grid with fast acting synthetic inertia, and frequency control. Batteries can inject power in to the grid instantaneously3.  This can prevent minor wobbles in grid frequency and voltage becoming wild fluctuations that lead to blackouts. When large amounts of generation (fossil or wind) suddenly drop out this is a real problem and the battery proposed could be useful in these situations.
  • Reduce price volatility.  The battery could slightly reduce average wholesale prices by reducing (but by no means eliminating) the number of times we go into peak price territory where every generator is paid thousands of dollars per MWh for short period.
  • Help out  for short time periods when the interconnectors hit their power limits.

But the batteries can only do this if the rules of the electricity market are changed.
What 300MWH of batteries won’t help with:

  • Shifting any substantial amount of solar to the evenings.
  • Covering for wind turbines on days with low or no wind.

And if the batteries are all in one place they won’t:

  • reduce network congestion (i.e reduce the need for more poles and wires)

In other words, Tesla’s offer of batteries can help stabilise the grid and make a contribution to lowering average wholesale prices, and that’s helpful.
Tesla’s ‘fix’ is not a magic bullet.
Integrating lots of renewables in to the grid is hard. There are underlying issues with our grid and our regulations which need to be fixed. It is not as simple as simply adding stacks of batteries. If we just add 300MWh/71MW of batteries and expect no more incidents going forward we risk being mightily disappointed.
So should we decline Elon’s offer?
No. We should embrace it, accept it and get cracking with building it while there is so much public enthusiasm and bipartisan support.
Technically, Elon is not offering any new solutions or being any more innovative than the likes of Adelaide’s Zen Energy who have been proposing such a battery for at least a year now and could deliver in a similar timeframe.
But Elon’s stroke of PR Genius looks like it might be able to solve the one seemingly intractable problem that has eluded everyone else up to now: punching through the toxic politics and risk averse energy bureaucracy in Australia.
With one twitter storm Musk and Cannon-Brookes might just manage to:

  • Break the public perception that “renewables are unreliable” and “baseload is the only answer” that the Libs have been stoking since the big SA storm last year.
  • Force a very quick change to the grid regulations that the fossil lobby has been pushing back on for years.
  • Punch through the political inertia that looked inpenetrable just a week ago and get the Libs and Labour and even far right nutters like Bernardi to agree on taking a risk on a big cleantech investment.
  • Promote an influx of private investment into Australia and SA.
  • Reward SA for being a global leader in renewables and refusing to back down in the face of the bullying Feds and a hostile media.
  • Kick start a large scale storage industry in Australia and the world, that local companies like Redflow, Zen and others can jump into.

I wish that we could deliver all the above with careful, reasoned argument and good engineering alone. But in a Trumpian world, the public and media seems to reject numbers, logic and debate but latch onto 140 character claims that batteries are the magic bullet. So we should ride this wave whilst it’s available to us.
But we need to be busy in the background.
We just need to make sure that in the background, under cover of the Mike & Elon show we get on with the real energy innovation that is fixing the underlying grid, changing the regulation, market rules, gas supply and tarrifs so that by the time the red ribbon is cut on the big battery, the renewables-intensive SA grid is running like a well oiled machine.
Let Elon & Mike take the credit – they  absolutely deserve it. Even if their 300MWh of batteries play only a small part in creating a renewable powered future, Tesla & Mike Cannon-Brookes will have played a big and important role by finally getting the public and pollies to believe that ‘energy security’ and ‘renewables’ really are compatible.


Footnotes

  1. Later corrected to 100MWh ↩
  2. The deterioration of our gas turbines is being accelerated by the constant ramping forced on them by renewables ↩
  3. Although I have no idea if the Powerpacks can achieve this in practice – see athomas’s comment ↩
Source: SolarQuotes. Reproduced with permission.

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