1st year income from Tesla ‘world’s largest’ battery equals 3rd of its cost

Tesla Powerpacks at the Hornsdale wind farm in Australia. Source: Tesla

There are a lot of known ways to generate electricity, such as solar, wind, tidal and other renewable sources of energy that are considered green energy.

One of the main challenges with these so-called ‘green energy’ sources is that they cost a lot to install and the cost-efficiency can be low. There are some efficient and greener energy sources that don’t cost as much, but even if they do, they have a better cost-efficiency which can help to make your money back.

Take the battery system installed by Tesla in South Australia last year for example. Elon Musk made a bet on Twitter that he could create the biggest battery in the world. However, the largest lithium-ion battery comes with a price, that price being A$90.6 million (US$64m).

Recovery of 1/3rd of the cost in just one year

The battery generated A$13.1 million (US$9.3m) in revenue from network services in just 6 months. Almost A$2 million (US$1.4m) of that was from a 10-year contract with the South Australian government to provide reserve capacity for the state’s electricity network, which is worth A$4 million (US$2.8m) per year.

The South Australian government’s contract is for 70MW of capacity and a small amount of storage, leaving 30MW and the majority of the battery’s storage capacity available to sell on the national energy market.

It also made A$10.8 million (US$7.7m) from the sale of stored electricity. The rest was from trading on the frequency and ancillary services market.

Tesla Powerpacks at the Hornsdale wind farm in Australia

Dylan McConnell, from the Australian-German Climate and Energy College, said the financial returns were above the already high expectations for the project, but that revenue growth could be expected to slow.

“There’s a finite need for these ancillary services,” he said. “They are very important resources but it’s quite a small market in the scheme of things.”

This 100MW/129MWh battery became operational in November last year and was paired with Hornsdale windfarm, about 230km north of Adelaide, owned by a French company called Neoen. Neoen has not revealed any figures related to its operating expenses.

According to a report in Sydney Morning Herald, current energy minister in a statement says that the government has no plans to substitute the renewable energy goals for the country once its Renewable Energy Target expires in 2020. The policy has driven large-scale investment in wind and solar energy.