Last year, when Tesla installed world’s largest lithium-ion battery in South Australia, there was a lot of excitement around it, mainly because there was a promise to revolutionize the way electricity is produced, stored and sold in a region that is known for blackouts and market monopolizing.
Now, less than two months later, that promise has been delivered by multimillion-dollar savings. You may be asking how did this happen? Well, Tesla’s big battery essentially came in a pulled the carpet from under Australia’s energy cartel that attempt to capitalize on power fluctuations and send the market into overdrive, meaning charging incredible amounts.
Normally, when there’s a planned maintenance of system faults, Australian Energy Market Operator asks energy companies to contribute some of their network services, known as FCAS (frequency control and ancillary services). On January 14, they asked for 35MW. The big companies — Origin, AGL and Engie — were only able to contribute 30MW of “low-priced” capacity (even though they have more than 400MW available), so prices were set to go through the roof just as they have in the past on 10 different occasions in the last 12 months. During these price hikes, prices reached AU$14,000/MW, and generators charging up to $7 million a day for a service that shouldn’t cost nearly that much.
This time, however, Tesla’s big battery came in to save the day. The big battery helped keep the market price down to around $270/MW, a substantial decrease from $14,000/MW. Experts have said that Tesla’s battery saved them around $3 million or more, which is good news for both market players and consumers.
According to Powershop Australia CEO Ed McManus, Tesla’s big battery is already having a “phenomenal” impact in the area. In this wee’s RenewEconomy’s Energy Insider podcast, he said that January 14’s events “plays into the thinking of new players looking to come into South Australia to challenge the incumbents”, and that it’s been a “very, very significant development for generation investment and generation competition” in the area.