On Thursday morning, the Australian Financial Review published a story that says that Lyndon Rive, Tesla’s Vice President for energy products, promised the company could deliver 100-300 MWh of storage to South Australia within 100 days of signing an agreement.
Mike Cannon-Brookes, the billionaire behind the software company Atlassian, saw the story and tweeted a link saying “Holy s#%t.” Cannon-Brookes then tweeted Tesla CEO Elon Musk “How serious is this bet? If I can make the $ happen (& politics), can you guarantee 100MW in 100 days? “
Musk replied in a tweet, “Tesla will get the system installed and running 100 days from contract signing or it’s free. Is that important enough for you?”
@mcannonbrookes $250/kWh at package level for 100MWh+ systems. Tesla is moving towards fixed and open pricing and terms for all products.
Elon Musk (@elonmusk) March 10, 2017
“It’s on mate,” Cannon-Brookes respond. Give me 7 days to try political correctness and funding. Give me a quote for approx 100MW cost – peer rates!”
Early on, Tesla worked privately with companies to set a price based on the size of the contract. But last night, Musk responded publicly to Cannon-Brookes with rates. “$250/kWh is the package level for 100MWh+ systems. Tesla is moving toward fixed and open pricing and terms for all products,” Musk tweeted. The rate would bring the cost of a 100MWh system to $25 million, excluding costs like labor and shipping.
That money was less than what Rive said in those Australian Financial Review– VP estimates “large installations are down to $US400-600 per kilowatt hour of capacity depending on the configuration, or about $US50 million ($A65 million) per 100MWh, with reductions for large-scale installations.”
Inside Australian Financial Review article, Rive has said that the rapid change will be possible because Tesla’s Nevada Gigafactory is ramping up production. The Gigafactory is where Tesla will produce large quantities of Lithium-ion batteries in partnership with Panasonic.
Tesla has been busy striking deals with utilities and grid operators. It announced the installation of a solar-panel-plus-battery system in Kauai this week and one in Southern California in January. The company, which produces electric cars, has said it wants to partner with utilities rather than compete with them.
The grid situation is particularly dire in South Australia, where numerous power outages and threats of power outages have caused concern. Australian news reports has been convicted Extreme weather, closings of aging coal plants, low gas prices, and delays in renewables are causing the crisis. Battery companies like Tesla argue that energy storage can reduce some of the pressure of peak load times and make renewables better on a diversified grid. On Thursday, Rive said Tesla could offer a similar battery contract to the state of Victoria, where a 1600MW plant is set to be built.
What will become of the exchange between the two billionaires is not yet clear, but Australian Environment and Energy Minister Josh Frydenberg told Reuters This morning that “Government is ready through ARENA (Australian Renewable Energy Agency) and CEFC (Clean Energy Finance Program) to work with companies with serious proposals to support the deployment of some storage open.”
Update: Ars explained that the total cost of a 100 MWh system does not appear to include labor or delivery.