Tesla got a huge gift this holiday season, and it’s all thanks to the Land Down Under.
Neoen Australia, a leading producer of renewable energy, announced this month that its Tesla battery system saved consumers nearly $40 million over the last 12 months and brought in $24 million in revenue.
Neoen brought the 100 megawatt/129 megawatt hour storage system, considered the “biggest lithium-ion battery in the world,” into service on December 1, 2017 though reports say it started operating a few days before.
The battery, known officially as Hornsdale Power Reserve, works in concert with Neoen’s nearby wind farm to secure and deliver the same grid services as a standard power plant to South Australia, with just a few exceptions.
Its power is cheaper, quicker, and produces zero emissions.
“This is extremely impressive, especially given the size and how quickly it was commissioned,” says Jake Raden with Swell’s impact team. “When utilities commission a coal plant or a nuclear plant or even a renewable asset, the payback period can be decades. This thing has almost paid itself off in 12 months.”
Indeed, Tesla built the hectare-sized battery in 54 days at a cost of $66 million. Of course, that was after Tesla CEO Elon Musk bet that the company could a) build the world’s biggest battery, b) do it in 100 days and c) use it to solve South Australia’s power issues.
Since its activation, the battery has lowered prices in the region's frequency and ancillary services market (FCAS) by 90 percent annually. It also eliminated spikes in service caused by the incumbent natural gas generators and negated the need for an emergency system, according to a report released by the consulting group Aurecon.
Moral of the story: Don’t bet against Elon Musk.
“He’s like P.T. Barnum,” Raden says. “He likes to make a big splash.”
The news served as a high point for Musk, who’s had a tumultuous year in the public eye, from his ouster as chairman of Tesla to perhaps the worst “puff, puff, pass” ever recorded. Moreover, it put a spotlight on Tesla’s energy products and its continual development toward becoming an actual energy company. The battery in Hornsdale is based on its Powerpack battery system, but with a couple extra spoonfuls of creatine mixed in for good measure.
“This is Tesla Energy’s proof of concept,” says Raden. “There’s already a huge amount of interest in the market today, and this seems to be something that they’re pretty focused on doing. They plan on expanding widely.”
The success of the Hornsdale battery should put an end to the biggest knock on renewable energy by fossil-fuel companies: That wind and solar are intermittent. The battery’s storage capabilities mean that it can store excess wind-powered energy when it’s not needed and either use it when the turbines stop turning, or when there’s a natural disaster that requires emergency energy usage.
“It’s made the value proposition of renewable energy indisputable,” Raden says. “It lowers the cost of operating it. It lowers the cost of the grid, and now you have batteries that are cheaper than the natural gas plant. This final energy storage was really the only thing left that anyone could complain about the transition to renewable and it’s over. This is proof.”
Check out the other pieces featured in The Current here: Bali is swimming in trash, here’s how one woman is making an impact, How skateboards are changing our oceans, and Is your brain tricking you into making a bad investment?
Jake Raden is an analyst with Swell’s Impact Team. Swell’s portfolios invest in Tesla stock.