Tesla's huge battery in New South Wales performing well

The huge battery at Hornsdale in South Australia is continuing to make its mark on the energy market in Australia. It made another $4 million in the fourth quarter from providing services. The battery is on track to recoup a third of its cost in one year.

The data was in the Australian Energy Market Operator's Quarterly Dynamics report. The report also reveals a growing focus on energy storage, time shifting, and energy arbitrage.

Elon Musk, Tesla CEO, upbeat about batteries

A recent article notes: "Tesla founder and CEO Elon Musk says the Tesla big battery in South Australia has been so successful it will likely pay for itself within a few years, and has prompted interest from other governments to install even bigger batteries as a substitute for dirty and expensive gas peaking plants. Musk, in comments accompanying the company’s latest quarterly results, which showed a small profit for a second consecutive quarter, said the company’s battery storage business is likely to double in 2019, and promised increased production would reduce waiting times for both Powerwall and Powerpack batteries."

Other big batteries added to the Australian grid in the fourth quarter

There was the Dairymple North battery in South Australia, and the Gannawarra and Ballarat large batteries in Victoria state.

The market awaits new regulations that could unlock the potential value streams to be generated by battery storage.

Observers fascinated by the performance of the Tesla huge battery

Both the performance and the business model of the giant battery have been seen as a wonder since it opened more than 14 months ago now. Not surprisingly, CEO Musk claims the $95 million facility will pay for itself in a few years.

The battery is actually owned and operated by Neoen Australia which receives a $4 million a year payment for providing grid services to the South Australian state government. This payment was worth considerably more in that the battery kept the lights on in the state after a lightning strike in New South Wales led to load shedding and generator trips in all other states.

AEMO

AEMO is described by WIkipedia as follows: The Australian Energy Market Operator (AEMO) performs an array of gas and electricity market, operational, development and planning functions. It manages the National Electricity Market (NEM) and the Victorian gas transmission network. AEMO also facilitates electricity and gas full retail contestability, overseeing these retail markets in eastern and southern Australia. It is additionally responsible for national transmission planning for electricity and the establishment of a Short Term Trading Market (STTM) for gas.[1]

Tesla has also made profit out of the Frequency Control Ancillary Services (FCAS) market. At the same time it has lowered costs and effectively destroyed a "cartel" like situation created by gas generators and allowed AEMO to remove constraints.

The latest data from AEMO shows that the Tesla's big battery's revenue from FCAS continued at a good pace. It gained $4.5 million net from FCAS contingency and regulation markets. A video of a celebration of the battery with a speech by Musk is appended.

Previously published in the Digital Journal