Elon Musk on batteries for Australia: “Installed in 100 days or it is free”

On Thursday morning, the Australian Financial Review published a story saying 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 a contract.

Mike Cannon-Brookes, the billionaire behind software company Atlassian, saw the story and tweeted a link saying “Holy s#%t." Cannon-Brookes then tweeted at Tesla CEO Elon Musk “How serious are you about this bet? If I can make the $ happen (& politics), can you guarantee the 100MW in 100 days?”

Musk responded in a tweet, “Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?”

“You’re on mate,” Cannon-Brookes responded. “Give me 7 days to try sort out politics & funding. DM me a quote for approx 100MW cost - mates rates!”

Early on, Tesla worked in private with companies to sort out pricing depending on the size of the contract. But last night, Musk publicly responded to Cannon-Brookes with rates. “$250/kWh at the pack level for 100MWh+ systems. Tesla is moving to fixed and open pricing and terms for all products,” Musk tweeted. The rate would bring the price of a 100MWh system to $25 million, excluding costs like labor and shipping.

That price was less than what Rive quoted in the Australian Financial Review—the VP estimated “large installations had come 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.”

In the Australian Financial Review article, Rive had said that the quick turnaround would 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 managers. 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 primarily produces electric cars, has said it wants to partner with utilities rather than compete with them.

The grid situation is especially dire in South Australia, where several power outages and threats of power outages have caused concern. Australian news reports have blamed extreme weather, the closures of aging coal plants, the low price of gas, and the intermittency of renewables for causing the crisis. Battery companies like Tesla contend that energy storage could alleviate some of the pressure of peak load times and make renewables fit better on a heterogeneous grid. On Thursday, Rive said Tesla could offer a similar battery deal to the state of Victoria, where a 1600MW coal plant is set to close.

What will come of the exchange between the two billionaires is still unclear, but Australian Environment and Energy Minister Josh Frydenberg told Reuters this morning that “The government stands ready through ARENA [the Australian Renewable Energy Agency] and the CEFC [the Clean Energy Finance Corporation] to work with companies with serious proposals to support the deployment of more storage.”