Tesla says its batteries could fix Australia’s energy problems in 100 days

They are only starting to gain a foothold in the Australian market, but could batteries provide a near overnight solution to the energy woes that have hit South Australia and risk spreading east?

At least one company believes so. In an elaborate launch in a former power substation in suburban Newport, in Melbourne’s west, Tesla Inc said its technology could provide a fix within 100 days.

The Californian company’s energy products vice-president Lyndon Rive said it could install up to 300 megawatt hours of grid-scale battery storage in that timeframe at a cost of about $66 million per 100 megawatt hours.

“If you had storage deployed during the blackout [in] South Australia you wouldn’t have had the blackout,” Mr Rive said.

It is understood the company believes the proposal would require a change in electricity market rules, but not a direct subsidy.

Tesla is not the first to make this sort of suggestion. Zen Energy, chaired by economist Ross Garnaut, last month said its proposal for a $100 million large-scale solar plant with battery storage could solve most of South Australia’s electricity problems if rules were changed to make it viable.

It comes amid heated political debate about how to ensure energy security and reliability, and to limit price rises while reducing greenhouse gas emissions.

Wholesale electricity prices have more than doubled across the national grid, largely due to sky-high gas prices and a policy vacuum that business groups say is preventing investment in power plants to replace ageing coal generators.

Meanwhile, South Australia has suffered blackouts in recent months following a huge growth in wind power driven by the national renewable energy target and the closure or mothballing of several coal and gas plants.

The blackouts have largely been caused by freak events and unplanned generation or transmission outages – on September 28 the state was hit be an extraordinary storm and there have been network operator mistakes – but have highlighted the need for flexible back-up as the grid is transformed.

Tesla expects a significant part of the answer to come from solar panels connected to home battery systems. About 6500 battery systems across all available brands were installed in households across Australia last year.

Mr Rive, Tesla founder Elon Musk’s cousin, said within a decade he expected all homes with solar to also have batteries.

Tesla’s latest lithium ion battery, the Powerwall 2, promises 14 kilowatt hours of storage for about $10,000 including installation. The new model is said to more than double the storage of the first Powerwall, and is 40 per cent smaller.

It can sit on the ground or be attached to a wall, and allows owners to store solar energy in the day to run their homes at night and to use it as back-up power should the grid go down.

Grattan Institute energy program director Tony Wood said batteries would play a role at a household level, but was sceptical about larger-scale proposals.

“If Tesla think they can do that, what’s stopping them? Providing they aren’t asking the government for some sort of subsidy and want to risk their own money, fantastic,” he said.

Mr Wood said the electricity grid needed reliability and flexibility. That could potentially come from batteries, gas, pumped hydro storage, stronger connections between states and managing demand at peak times. The Turnbull government has earmarked pumped hydro, recently announcing $20 million in research funding.

He warned against putting too much faith in predictions about which energy technologies would prove viable, citing past hype about geothermal energy.

“The one thing you can say about technology forecasts is they’re all wrong. The only question is which are going to be less wrong and by how much,” he said.

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