Tesla Building Massive Energy Storage System in South Australia

Elon Musk is following through on a promise to alleviate South Australia's energy shortages.

Tesla Unveils New Battery System
Kevork Djansezian—Getty Images

Tesla has announced it's build what it calls the world's largest battery energy-storage system in South Australia. Arrays of battery packs will store energy generated by renewable sources in an effort designed to help alleviate blackouts.

South Australia was hit by a storm in September 2016 that caused a statewide blackout, leaving 1.7 million people without power. As a result, the state government sought to use renewable energy connected to energy storage systems to provide more reliable power. After a competitive bidding process, Tesla was awarded a contract to supply a system of at least 129 megawatt-hours, a company blog post said.

Tesla Powerpack lithium-ion battery packs will draw energy from the Hornsdale Wind Farm near Jamestown, South Australia, which is operated by renewable energy company Neoen. The battery packs will store energy during periods of low demand, and release it during periods of high demand. This not only ensures a consistent supply of electricity, but also helps "balance" the grid by eliminating sharp peaks in electricity transmission, which makes utilities happy.

Tesla expects the system to come online in December. At full capacity, it will provide enough energy to power more than 30,000 homes, the company said. Tesla is also encouraging South Australians to install smaller Powerwall battery packs in their homes to act as backup power sources.

As it turns out, Tesla was drawn into the project by a bet. Earlier this year, Lyndon Rive—Tesla's vice president of energy products and CEO Elon Musk's cousin—visited South Australia and claimed he could solve its energy problems in 100 days. Entrepreneur Mike Cannon-Brookes subsequently tweeted at Musk asking if Tesla was serious. Musk said that if Tesla did not have the system installed in 100 days, it would be free.

Since Tesla doesn't expect the system to be completed until December, it appears that bet is no longer in effect.