Tesla’s giant battery reduces cost of power outages by 90 per cent in South Australia

Wind-powered system responds much faster than traditional grid backups

Josh Gabbatiss
Science Correspondent
Sunday 13 May 2018 14:44 BST
Tesla’s enormous battery in Southern Australia

Tesla’s enormous battery in South Australia has led to a massive drop in the costs of backing up the region’s power supply, potentially saving local people millions of dollars.

New figures presented at Australian Energy Week suggested the new system, which is powered by wind turbines, has reduced the price of expensive power outages by 90 per cent.

The battery was installed as a backup power supply towards the end of 2017, and has already exceeded expectations.

It has been recorded smoothing out major energy outages far quicker than existing backups that are meant to provide emergency power, and it has now taken a majority share of the market.

When there is a fault or maintenance is required in the Australian power grid, the energy market operator must call for frequency control and ancillary services (FCAS) to step in.

These services consist of costly, fossil fuel-powered backup systems.

The Tesla project, on the other hand, is based around an enormous lithium ion battery that is capable of providing the same service not only quicker and cheaper, but also with zero emissions.

“In the first four months of operations of the Hornsdale Power Reserve (the official name of the Tesla big battery, owned and operated by Neoen), the frequency ancillary services prices went down by 90 per cent,” said Godart van Gendt, a partner at consulting firm McKinsey and Company, at the Australian Energy Week conference in Melbourne on Thursday, which was reported by clean energy news outlet RenewEconomy.

Mr Van Gendt presented new figures about the Tesla battery’s performance, which also revealed it has now taken over 55 per cent of FCAS in the region.

South Australia is now reportedly the only state that has experienced a decline in FCAS costs in recent months.

Some estimates suggest the cost savings to consumers as a result of this decline have been up to A$35m (£19.5m) in the first four months of the Tesla battery’s operation.

Lara Olsen, Tesla Energy’s regional manager of business development, also spoke at the event and explained that while other FCAS systems rely on volatile fuel costs, the wind power the battery relies on is fixed at a cheap and stable price.

While local politicians in South Australia largely welcomed the giant battery as a key component in efforts to make the state more self-sufficient and provide affordable energy, there has been push back from the higher levels of government.

Australian resources minister Matt Canavan even compared it to Kim Kardashian, stating that “it’s famous for being famous. It really doesn’t do very much.”

However, the success of the project has been recognised by the Australian Energy Market Operator, which has noted that it is capable of responding to outages much faster than conventional generators.

South Australia has been hailed for the lead it has taken on renewable energy, with state Labour politicians lending their support to large scale developments including the world’s largest solar thermal plant. The Tesla battery is seen by experts as another jewel in the state’s green energy crown.

To some extent the system’s efficiency has not been a positive thing for Tesla, which has stated that the speed of the battery is not being accounted for properly, resulting in the company missing out on payments.

Nevertheless, its success has led to interest in further Tesla projects, with a solar-powered version set to be built in the Australian state of Victoria.

While the Hornsdale Power Reserve battery currently holds the title of the world’s largest, Tesla CEO Elon Musk recently hinted at an even larger project set to be announced soon.

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