Musk Call With Turnbull Sparks Battery Debate in Australia

Updated on
  • Turnbull declares energy storage will be priority this year
  • Resources minister says batteries part of mix with clean coal

1473964229_musk

Elon Musk’s brave bet to fix Australia’s energy crisis -- or hand the money back -- landed the tech entrepreneur an hour-long phone call with Prime Minister Malcolm Turnbull and quickly threw him into a debate over whether battery technology is the solution for a nation still wedded to coal for much of its power.

Sunday’s call followed a Twitter conversation last week between Musk and Australian tech billionaire Mike Cannon-Brookes in which Musk promised to install and get working a Tesla Inc. battery storage system designed to prevent blackouts in South Australia, the Australian mainland state most reliant on renewable energy. The promise injected Musk into the middle of a messy political spat in Australia over energy policy.

Musk’s 100-day battery promise found a receptive ear in Turnbull who made innovation a flagship policy ahead of an election last year and prior to politics made a fortune in the late 1990s dotcom boom. Energy storage will “be a priority this year,” Turnbull tweeted after the call. Musk replied on Twitter that renewables and storage were huge disrupters to traditional electricity supply while Cannon-Brookes said in an emailed statement that the “space age” technology could be a speedy solution for South Australia.

AGL Energy Ltd. lent its support to the project Monday saying it had offered Tesla a battery storage site in South Australia.

Read More: Musk’s Australian battery gambit is a viable bet

“It sounds like a bit of a crazy idea but sometimes crazy ideas can have a big impact,” said Tony Wood, director of energy at the Melbourne-based Grattan Institute.

A series of blackouts in South Australia have raised fears of more widespread outages across the nation’s electricity market and raised questions as to why one of the world’s largest producers of coal and gas is struggling to keep the lights on in a mainland state.

“The issue now is who is going to pay and exactly what problem will it solve: it won’t stop violent winds knocking out a powerline and it won’t stop high summer temperatures,” said Wood. “Sometimes you can make something that sounds fantastic but then actually doesn’t do very much."

South Australia’s state government, led by Premier Jay Weatherill, is scheduled to release a new energy policy on Tuesday.

Turnbull’s conservative-leaning government has previously blamed the power cut on the state’s rapid take-up of renewable power amid a broader campaign warning against the opposition’s plan for a 50 percent renewable energy target by 2030. Solar and wind account for about 40 percent of South Australia’s power generation, the highest of any mainland state. Due to their intermittent power flows, companies like Tesla argue battery technology can help store and ultimately manage when electricity is provided.

100 Day Challenge

Delivering a workable plan in 100 days may prove difficult given the competing energy strategies at play within the Turnbull’s government. The prime minister has in recent weeks promoted the use of subsidizing clean-coal power stations to help improve energy security and cut consumer power bills. Resources Minister Matt Canavan, who has visited Japan to look at high-efficiency coal-fired power stations, downplayed the conversation between Turnbull and Musk on Monday, telling ABC Radio “it’s just discussions” and nothing specific to South Australia was discussed.

The Tesla co-founder can point to success where it delivered a similar-sized battery project in Southern California in 90 days to alleviate the risk of winter blackouts. But Musk also has a mixed record of delivering on his promises. The Palo Alto, California-based maker of electric cars and energy-storage products has missed almost every aggressive product milestone it set for itself in the past decade and its mass-market electric sedan continues to be plagued by production delays.

Australian battery producers are also waiting in the wings. Sydney-based AGL, the nation’s largest energy retailer, aims to set up the world’s largest virtual power plant in South Australia to ease stress on its electricity grid at a cost of about A$20 million ($15 million). Energy storage company ZEN Energy is also exploring the development of a 150 megawatt battery in South Australia. LG Chem Ltd. and Panasonic Corp. are among companies that have entered into an Australian storage market that Morgan Stanley estimated could be valued at A$24 billion.

Carnegie Clean Energy Ltd., a developer of utility-scale wave energy, on Monday confirmed discussions with the government of South Australia regarding the provision of utility scale battery energy storage solutions into the state’s electricity network, it said in a regulatory statement.

Watch Next: Tesla's Sexy Solar, Massive Batteries and Fast Cars

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE