Elon Musk Bets Tesla Can Solve South Australia's Electricity Woes in 100 Days
The company's founder and chief executive has offered to provide the government, free of charge, $25 million worth of Tesla battery packs if he can't turn around the state's chronic power shortages.
With energy blackouts and price spikes plaguing South Australia, Tesla Inc. chief executive Elon Musk is betting that his company can quickly solve the problem - or he'll hand over $25 million worth of the company's battery packs for free.
Thursday night, in a short back-and-forth on Twitter with Australian software billionaire Mike Cannon-Brookes, Musk confirmed the company's offer was sincere, writing, "Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?"
Cannon-Brookes responded, "You're on mate. Give me 7 days to try and sort out politics & funding."
Intense heat waves, made more likely by human-driven climate change, have scorched Australia this year, with temperatures regularly topping 100 degrees Fahrenheit. That has stressed the province's power infrastructure, causing energy demand to spike, supplies to dwindle, and a major blackout to occur last month.
Australia is the world's top market for rooftop solar, and South Australia uses more renewable power than anywhere in the country. But fierce debates over energy policy have raged as supply has flickered.
In September, after storms collapsed electricity towers and left the entire state without power, Australia's premier Malcolm Turnbull called the blackout a "wake-up call" for politicians eyeing renewable energy targets he deemed "completely unrealistic."
And that's where Tesla enters the scene.
Battery storage would help solve one of the trickiest problems with renewable energies - their inconsistency, such as what to do when the wind doesn't blow or the sun isn't shining, which often happens during periods of peak electricity demand.
Much of the current battery technology on the market is inefficient and expensive. But Tesla promises to deliver cheap, dependable energy storages.
In January, Tesla began mass producing lithium-ion battery cells at their Gigafactory in Nevada for use in their electric vehicles and home battery systems. They also completed an 80 megawatt hour (MWh) battery farm in southern California - utilizing an array of nearly 400 batteries - in just 90 days, after a natural gas facility in Los Angeles was forced to closed after a months-long methane leak.
Tesla rolled out the second version of its home battery, the Powerwall II, this week in Australia. At the product launch, Lyndon Rive, who is Tesla's Vice President for energy products - and Musk's cousin - credited the new Gigafactory with making the company's 100 MWh offer possible.
"Because of the big factory that we've built that is now operational, that's caused a boost in production and made it cost effective," Rive said. He added, "We are very confident that this tech can stabilize the grid."
The Australian government told Reuters they are interested in exploring the offer.
"The government stands ready through [Australian Renewable Energy Agency] and the [Clean Energy Finance Commission] to work with companies with serious proposals to support the deployment of more storage," Environment and Energy Minister Josh Frydenberg said.