South Australia Battery Announcement
Questions on ElonsFAQ asked in this interview (1)
Transcript
0:00Jay Weatherill (SA Premier)South Australia is already leading the nation. Today we lead the world. We're announcing the world's largest lithium ion battery. That battery will be built in Jamestown, just a few hours from the centre of Adelaide.
0:17Jay Weatherill (SA Premier)It will be a partnership between Tesla and also neom. Tesla, of course, one of the most exciting technology companies in the world, and neon, one of the most reputable renewable energy companies in the world.
0:32Jay Weatherill (SA Premier)Coming from France, this project will provide for 100 megawatts of battery storage. It will be associated with the Horn Dale wind farm which is located in that same area in Jamestown.
0:49Jay Weatherill (SA Premier)What it will do is completely transform the way in which renewable energy is stored, restored and also stabilised the South Australian network, as well as putting downward pressure on prices.
1:02Jay Weatherill (SA Premier)This has been an extraordinary collaboration on an international basis and I want to thank all of those who have participated in bringing us to this day. It's been an incredible journey.
1:15Jay Weatherill (SA Premier)On the 9th of February we had an unnecessary load shedding event coming on top of the blackout that occurred back in September. South Australians were shocked and I think had completely lost confidence in the national electricity market.
1:32Jay Weatherill (SA Premier)What they were demanding of their elected representatives is they stand up and take control. So the next day we did just that. We stood up and said that we would produce an energy plan that takes charge of South Australia's energy future.
1:51Jay Weatherill (SA Premier)That energy plan was developed over the six week period up until the 14th of March and one of the central elements of the plan that we developed was the nation's largest battery.
2:09Jay Weatherill (SA Premier)Today what we're revealing is the world's largest lithium ion battery, a grid scale battery that will provide stabilization services to the grid, have the capacity to make a very serious dent in the $48 million worth of ESCAs services which are purchased from the Australian energy market, putting downward pressure on prices here, also opening up new possibilities for renewable energy in this state, in this nation and around the world to be dispatchable renewable energy providing firm, essentially baseload capacity for people and industrial users to power their businesses.
2:54Jay Weatherill (SA Premier)So it starts here in South Australia. We had about 91 bidders, international bidders to this process. Of course that was assisted by a little bit of Twitter exchange in the few days before we released our plan between Elon Musk and also Mike Cannon brooks and those 91 bidders were carefully assessed and I want to thank all of them for the way in which they participated in the process.
3:26Jay Weatherill (SA Premier)We did come to a view that there was a superior bid and it is this partnership between Neon and Tesla. And we're three thrilled to be able to announce Today, that that is the winning consortium that is going to put this project together.
3:43Jay Weatherill (SA Premier)I want to also thank the teams that worked on this. In particular, I want to thank the team in South Australia led by Tom Kutsun Thomas, our Minister for Energy, the team he assembled in his agency, led by Sam Crafton, and really an extraordinary group of South Australians who worked incredibly hard to make sure that this incredibly important timeline, that is the 1st of December, the beginning of summer, was going to have the delivery of this battery.
4:17Jay Weatherill (SA Premier)One of the offers that was made very early on in the process by Tesla was that from the signing of the Grid Connection agreement, they would deliver this battery within 100 days or it is free.
4:30Jay Weatherill (SA Premier)It's an extraordinary offer and it's one which is now being committed to and is part of the contractual arrangements. And that's a fantastic degree of security that South Australians have that we will have this in place by the beginning of summer.
4:46Jay Weatherill (SA Premier)I want to also thank the people who have negotiated with us, both NEO and Tesla. It has been an incredibly tight timeline to complete what are incredibly complex negotiations.
5:01Jay Weatherill (SA Premier)And so, ladies and gentlemen, it's my great pleasure now to introduce you to the international head of energy for Tesla, Carl Langton, and also the Chief Executive Officer of Tesla, Elon Musk.
5:17Jay Weatherill (SA Premier)Thank you.
5:30Jay Weatherill (SA Premier)So we're here to answer your questions and on the topic of the battery, and if anyone has a question far away.
5:42Neoen ExecutiveNo question.
5:43Elon MuskI can't believe it. Mr. Musk, Mike's message, channel seven. Do you see any risk, risk in this at all? Your reputation, global reputation is at risk here. South Australia's energy situation in the past has been seen as sometimes a joke and sometimes disastrous.
6:02Elon MuskHow do you place it with your reputation? Well, we thought about this and there is certainly some risk because this is going to be the largest battery installation in the world by a significant margin.
6:16Elon MuskThis is 100 megawatt battery installation. The next biggest battery system in the world is 30 megawatts. So we're talking about something that is more than three times as powerful as the next biggest battery installation in the world.
6:29Elon MuskAnd we actually insisted in doing the contract that we be held to the 100 days or it's free. That's what we said publicly. That's what we're going to do.
6:39Elon MuskI'd also like to thank Mike Cannon Brooks for, for talking smack with me on Twitter and kind of getting that. I think he deserves some credit there as well.
6:53Elon MuskHow much will it cost you if you don't live up to that commitment? If you go 100, 102 days. What's it going to cost you? A very large sum of money.
7:05Elon MuskI don't know, probably $50 million or more. I don't know. Aligned.
7:11ReporterOne of your other projects in California was worth about 5 billion are red.
7:18Elon MuskI don't think. Not 5 billion.
7:19ReporterNo, that was the 80 megawatt hour plant.
7:25Elon MuskNo, no, I think there's a few digits missing there. So how much is this going to cost in total? I'm not sure if we. I'm not sure if that.
7:36Elon MuskIt's something that we can discuss, but it was. Is that public knowledge or not?
7:40Tesla ExecutiveIt is not.
7:40Elon MuskNo, it's not. Okay, so we can't say the exact, the exact number, but also leave that up to South Australia if they want to disclose it. But it's. There are two, three parties, Neo and Tesla and South Australia.
7:54Elon MuskWe would not speak for them unless they agree as well. This is significantly bigger than the project in California which was the, when we got, when we brought that online in December of last year, that was the biggest battery in the world.
8:11Elon MuskBut that system is approximately 20 megawatts in power and this is 100 megawatts. So it's a massively different thing. In fact, I really think that like the most salient point here is that the system will be three times more powerful than any system on Earth.
8:31Elon MuskThis is a, this is not like a sort of a short, like a minor foray into the frontier. It's just like, you know, going three times further than anyone's gone before,
8:41Tesla Executiveif I may add something. Yeah, so beyond focusing on the costs, the interesting thing about this plant is actually going to lower costs for consumers in South America.
8:48Elon MuskThat's a very important point.
8:49Tesla ExecutiveSo as opposed to being something that costs taxpayer money or the largess of the public is actually going to provide price stability, market stability and lower prices overall for customers, especially at the summer peak months.
9:04Jay Weatherill (SA Premier)What's the technical challenges?
9:06Elon MuskI mean it's just the normal technical challenges that come with scale. So when you make something three times bigger, does it still work as well? We think it will, but there's certainly some risk in that.
9:17Elon MuskAnd we're confident in, in our modeling techniques and in the design of the system. But whenever you make something three times bigger than anything that's come before, there's always some risk.
9:26Elon MuskMr. Musk, can I just ask. Up the back here. Okay. Sorry, it's hotel. Sorry. Just over here. What will the battery be used for? Will it be used for arbitrage or simply stability services?
9:37Elon MuskAnd when you say 100 days or it's free. Who is it free for? Neoen or the South Australian taxpayers or both? Well, I think if it's for the. Primarily the free would be for South Australian taxpayers.
9:49Elon MuskYeah. And it has. The grid stabilization is a huge factor, as Cal was saying, because it's able to stabilize the grid and buffer power. You can essentially charge up the battery packs when you have excess power and where the cost of power production is very low and then discharge it when the cost of power production is high.
10:12Elon MuskAnd this effectively lowers the average cost per kilowatt hour to the, to the end customer. It's a fundamental efficiency improvement for the grid and it's really quite necessary and quite, quite obvious when sort of considering a renewable energy future.
10:29Elon MuskWhen you have wind or solar, it's obviously not windy all the time and it's clearly not sunny 24 hours a day. So you have to buffer the power and store the power during the middle of the day in order to discharge it at dawn, dusk and night.
10:47Elon MuskIt's really not complicated in that sense. It's really, really quite straightforward. And then for wind energy to store it when it's windy and discharge it when it's less windy.
10:57Elon MuskThis is extremely important, fundamental in a way you can think of Earth like Earth is like a giant satellite. And the way that satellites are powered, including the big geostationary satellites which are quite familiar.
11:10Elon MuskWe just launched one actually at SpaceX. Those will last for 20 years with no maintenance in orbit. Literally no one can go to them. So they're designed to zero maintenance and they're entirely powered by solar and battery, but there's no fundamental scaling limit.
11:28Elon MuskSo just as you can power a big satellite purely with solar and a battery, you can power Earth purely with solar and a battery. Earth is a giant satellite.
11:36Elon MuskThis was all triggered by Twitter. When did this become more than a thought bubble or a game for you? When did you become really involved in the process? Well, it's certainly never a game, but I was made aware of it by the Tesla team that, that there was really this opportunity to make a significant statement about renewable energy to the world, to show that you can really do a heavy duty, large scale, utility level battery system and that South Australia was up for the challenge.
12:17Elon MuskThen that team asked me like, are we willing to take a big risk on this? And I said absolutely. If South Australia is willing to take big risk, then so are we.
12:26Neoen ExecutiveSome people in Australia want to build new coal fired power stations.
12:30Elon MuskHow does that compare economically with building new renewable energy power stations instead? Yeah, the fundamental challenge with coal power stations is that they're quite difficult to get financed because the writing's on the wall for the long term future of coal, which is that coal does not have a long term future.
12:50Elon MuskAnd so when, when one looks at the establishment of a new coal power plant or doing a major upgrade of an existing coal power plant, when going to investors to get financing for that, investors know that coal does not have long term future.
13:07Elon MuskSo the cost, the capital cost is incredibly high because they want to charge a very high interest rate because they're not expecting it to last 30 years, which is normally the length of time that they would want to amortize the value of a power plant.
13:20Elon MuskSo effectively, coal becomes very expensive because people aren't willing to invest in something that doesn't have a great future.
13:27ReporterMr. Musk, Stacey Lee from Sky News up the back here.
13:30Elon MuskOkay,
13:33Reporterthis will be built in Jamestown. What does that mean for the community there? How many jobs do you expect this to create up there?
13:41Elon MuskWell, I think it's a massive installation, so there will obviously be a huge initial input of jobs and I think long term, because it will be three times more powerful than the next biggest battery installation in the world.
13:53Elon MuskAnd we're going to make an effort to have it also look good that it actually will be a tourist destination for at least some period of time because you just want to see this giant battery farm.
14:03Elon MuskBut I mean, I think they're really quite nicely arranged, kind of white obelisks. I mean if it sort of, you know, if this got unearthed in the future, it would look like what was this, some sort of art exhibit or something?
14:14Elon MuskI don't know. What were they after? Right. So I think it'll have some value as sort of a tourist spot for a while. And Raquel, if you'd like to elaborate on that.
14:24Elon MuskYeah, absolutely, absolutely.
14:26Tesla ExecutiveEspecially for the construction phase. And I'll be honest, the operations and maintenance of the battery system are designed to be pretty self sustaining. So it's not a significant amount of people who have to be there to upkeep the system for all the construction phase, which will last into December.
14:39Tesla ExecutiveNotionally we'll have to be tens or hundreds of jobs are being created Jamestown.
14:44Jay Weatherill (SA Premier)There's a local contractor, cpp, that's won the contract to be part of doing it here. So it's a South Australian company, cpp and they'll be doing that on ground work.
14:57Elon MuskWhat's the useful life of the batteries
14:59Tesla Executiveand will you cycle them through contingency?
15:03Elon MuskYeah, so the useful life of the battery, depending on how long, what energy level is considered to be, the end of life of the battery is sort of on the order of 15 years.
15:15Elon MuskBut it does depend on how heavily the battery is used, what percentage of the how deeply it's discharged, how aggressive power is added to the pack or removed from the pack.
15:25Elon MuskBut the electronics can last 20 to 30 years, and the cooling system thermal control loop can also last on that order. So over time, what you can do is you can add more power packs to supplement the decline in the energy capability of the older ones, and they will seamlessly blend into the system.
15:46Elon MuskSo it's not as though everything is junked. And are they recyclable? They are certainly recyclable and in fact it makes sense to recycle lithium ion battery packs because the material constituents are still quite valuable.
16:02Elon MuskThe primary cost driver, in fact, in the cells tends to be nickel. So you can think of it as very nickel rich ore is one way to think about it.
16:11Elon MuskBut typically the cells have about 10% of their value even when they have no energy capability left.
16:19Tesla ExecutiveConsidering South Australia already has a high number of wind farms spread around the state, do you hope this will be a first step into maybe partnering with other organizations as time goes on?
16:30Elon MuskIf it's a success? Yeah, I think this deal is actually going to be incredibly helpful within Australia and around the world as a proof point for being able to do large scale utility battery applications.
16:46Elon MuskAnd certainly, I mean, there's obviously going to be a lot of people looking at it and saying, did they get it done in 100 days? Did it work? Are there any issues?
16:54Elon MuskObviously those are the right questions to ask and so we're going to make sure that it does.
16:59Tesla ExecutiveMaybe if I can add something to that. We talked about it earlier, the shift away from coal. I mean, really, we talk about, you know, why would you even build a new coal plant or even a new gas plant?
17:09Tesla ExecutiveI mean, I specifically think that the cost, the consistently lowering cost of batteries coupled with renewables is going to fundamentally reshape the energy landscape much faster than anyone thinks it will.
17:20Tesla ExecutiveWe're already seeing that on island grids. We have a project similar in scope to this, much smaller in size on the island of Kauai, where they have too much sun.
17:30Tesla ExecutiveSo now they're only building solar plants paired with batteries, which are essentially baseload generators. They charge it during the daytime and they charge in the daytime from sun, and they discharge at night to provide baseload power.
17:40Tesla ExecutiveAnd so, I mean, I think in the very near future, all new renewable energy plants will have batteries coupled with them just as par for the course. And it's going to totally reshape the fundament of the energy system.
17:51Elon MuskYeah, it has to. Of course, like I said, there's a sort of common sense that if you have solar, you must have battery because otherwise your power is just going to be proportionate to how sunny it is.
18:05Elon MuskIt's really obvious.
18:06ReporterMr. Musk, have you actually visited the Jamestown site or will you on this
18:10Elon Musktrip to SA I actually just came right from the airport to here, but I will visit it before I leave. Yes.
18:18ReporterAnd how long are you in town for?
18:20Elon MuskI'm not sure. I think at least until tomorrow. I'm not sure what day. It's Friday. Right.
18:29Jay Weatherill (SA Premier)Are there any other questions? Yes.
18:33Elon MuskDid you see this as a financial opportunity for yourself or did you just see it that you felt sorry for South Australia? I certainly don't feel sorry for South Australia.
18:45Elon MuskThis is a great place. In fact, I'm pretty darn impressed with South Australia willing to do a project of this magnitude that's beyond anything else in the world. Like I said, South Australia is doing something that's three times more powerful than anything else on earth.
19:03Elon MuskSo it takes a lot of gumption. I do see this as something that the world will look at as an example and being able to do large scale battery applications for the grid that really take a large amount of load, it's really going to be an example to the rest of the world.
19:25Elon MuskBut we need to deliver, we need to get it done. We need to make sure it's working properly and we want to do it in less than well under 100 days.
19:35ReporterThere have been a lot of critics federally about South Australia's energy policy. Do you implore other states and maybe the federal government to follow suit? Is this the way of the future?
19:47Elon MuskI think this is definitely the way of the future. And I think it's worth other states taking a close look at this and seeing if it's applicable to their needs, which I suspect in worst case it is.
20:01Jay Weatherill (SA Premier)Okay. Ladies and gentlemen, could you thank Elon and Cal for being here.
20:06Elon MuskThanks very much.
20:19Jay Weatherill (SA Premier)Ladies and gentlemen. We also have an opportunity to hear from the representatives of Neo N and we also have Mr. Romain de Russo. Thank you, Romain. And also Frank Bourgier.
20:34Jay Weatherill (SA Premier)Thank you.
20:41Jay Weatherill (SA Premier)So we're also, of course, this. NEOEN is a world leading renewable energy company based in France, but now has a very large proportion of its international operations based here in Australia.
20:55Jay Weatherill (SA Premier)It of course has the Hornsdale Wind Farm, which is over a 300 megawatt wind farm with a very large number of wind turbines. 99 is it. And so this is an opportunity for them not just to provide the services to South Australia, but also in the balance of the battery to also on sell that particular service and participate in the market.
21:23Jay Weatherill (SA Premier)So this represents another dimension, if you like, of what we've announced today, which is the future capacity for us to firm up an industrial user and introduce competition into the South Australian part of the market.
21:37Jay Weatherill (SA Premier)And this is a critical issue for South Australia to be able to put downward pressure on prices is to actually increase the number of contracts that exist within the South Australian electricity market.
21:49Jay Weatherill (SA Premier)So these two gentlemen are also here willing to answer your questions. Thank you,
21:56Elon MuskChairman. At what level stage did you first
21:59Tesla Executivetouch base with airflow?
22:07Neoen ExecutiveFrom the beginning we've been looking at possible battery suppliers and I have to say that Tesla was quickly identified as outstanding partner with an ability not only to deliver such a large scale product, but also, we strongly believe to help us operate it and integrate it to the grid.
22:26Neoen ExecutiveThe challenge is not only to build it, but it's going to be to have it working with the IMO and the grid to deliver. And we also understood quickly that there were strong commitments at the highest level of Tesla's organization.
22:43Neoen ExecutiveSo.
22:49ReporterWill you expand the wind farm as well? Are there plans to do other things as well?
22:53Neoen ExecutiveThe wind farm is already the largest renewable generator in South Australia and it might not be in the plan to expand in this location, but there's a lot of other good locations in South Australia where the wind and solar regime are outstanding to do more wind farm with storage.
23:11Neoen ExecutiveThis is really a pilot of how we should integrate renewable with storage to make long term sustainable, dispatchable and competitive energy for South Australia, but also for most of the places in the world.
23:27Jay Weatherill (SA Premier)What's the cost to neom?
23:28Elon MuskAre you putting half the bill with Tesla?
23:30Neoen ExecutiveWe are.
23:32Elon MuskI'll just ask how do you plan to use the battery on a daily basis and whether the way energy is priced wholesale is having to affect that given we have half hour.
23:46Neoen ExecutiveSo there's first of all a contract and a commitment to the SOPH Australian government or the battery will mainly use for the purpose of providing grid security and grid stability and power reserve and there will be additional revenues generated by the market.
24:01Neoen ExecutiveThis will be through sell electricity through EFCAS services and so on, but a bit of IP behind that.
24:11Elon MuskHow confident are you you are going to be able to get batteries next?
24:16Neoen ExecutiveSo the honesdale wind Farm Stage 2 has been built, has been commissioned in June this year, the 8th of June. The third stage is really well underway. So we have been developing and building the wind farm with cement and cpp.
24:31Neoen ExecutiveSo for Australian subcontractor for the electric balance of plant. So in terms of experience and understanding of what is going on on site, we know the site perfectly well, the subcontractors understand the connection and we believe the FCAS trial, which we're jointly with AMO and ARENA performing on Honesdale 2 will also help us getting through the registration steps, which are important steps in that context.
24:58Neoen ExecutiveWe are not that worried on the
25:00Elon Muskdelivery of the battery.
25:02Neoen ExecutiveWe are confident the connection will be performed adequately.
25:06Elon MuskYou're waiting for AEMO sign off for the 100 day period. Do you have any time frame of when that will occur?
25:13Neoen ExecutiveWe will be working very hard with Audrey and the team at AEMU to make it happen as quickly as possible. We have a very short time frame.
25:27ReporterCan you guarantee that power prices for consumers, for households and for businesses will actually go down?
25:35Neoen ExecutiveI think guaranteeing would be an overstatement, but necessarily the fact that EFCAS services being provided through competitive sources of renewable electricity would have an impact, yes. Guaranteeing, I'm not sure I would.
25:49Neoen ExecutiveThe wind farm is selling electricity between half and two thirds of the price of the average price of the market. So with the storage, we're going to be able to bring this cheap electricity half of the average price at the moment when the people need it, and not only when the wind blows.
26:07Neoen ExecutiveAnd that's really what we want to do.
26:09Elon MuskCan you just take us through the arrangement with the South Australian government about when the government has the right to tap the battery, how that arrangement will work?
26:20Jay Weatherill (SA Premier)We think we have an arrangement where I think 70% of the battery is reserved for South Australian government purposes, notionally 30% for market based activity. And there's a series of quite complex agreements about way in which we gain access to that.
26:40Jay Weatherill (SA Premier)So there's a clear understanding between us about the use of the battery for our purposes.
26:46Neoen ExecutiveAnd it's also important to note that this is a process which is deemed to evolve. We plan with the government and the regulator, regular meetings to make sure that the battery is used as well as possible and that we take good lessons and good understanding from this unique example in South Australia and that we'll be able to replicate it in Australia and in other parts of the world.
27:11Neoen ExecutiveIt is the word Premier and it means we'll have to work on it to make it as efficient as possible.
27:17Elon MuskHave you got further investment in South Australia and the energy sector planned in the future as well?
27:24Neoen ExecutiveSo NE1 is a global IPP, independent power producer, building renewable energy generators. We have been investing In Australia since 2012, more than 1 billion Australian dollars, and we are planning to invest approximately the same amount of money in the next 12 to 18 months.
27:44Neoen ExecutiveSouth Australia has benefited from the core of our investment through the Honesdale Wind Farm and through the Hornsdale Power Reserve. We have several other projects, including in South Australia.
27:55Neoen ExecutiveYes.
27:55Elon MuskDo you see much further room for growth here? Because along with this battery, there is also new energy security.
28:04Neoen ExecutiveNo, I think we were limited in growing in South Australia without the battery. Now we're really going to start to be able to do real wind in South Australia.
28:13Neoen ExecutiveIt's the beginning. The government's initiatives. The energy security plan is really a game changer in the world and South Australia is going to be seen as of now as a leader in being able to solve the equation of intermittent electricity, electricity and grid stability.
28:32Neoen ExecutiveSo Neuyen is very proud to be part of the experimentation Word Premier. And under your leadership, Premier, the world is going to have the eyes focused on the next four months.
28:48Jay Weatherill (SA Premier)If there are no other questions, could you thank Frank and Romain?
28:53Elon MuskThank you very much.