
Musk Bets He Can Fix Aussie Power Woes in 100 Days or It’s Free - adventured
https://www.bloomberg.com/news/articles/2017-03-10/musk-bets-he-can-fix-aussie-power-woes-in-100-days-or-it-s-free
======
owenversteeg
I know nothing about the Australian power grid but I do know a fair bit about
batteries.

The cost of batteries and surrounding hardware here means that on this
particular deal Musk is losing money. 100 days isn't a lot of time, and he
needs to get about 1% of yearly global li-ion battery production to Australia,
build surrounding hardware, AND install it in 3 months.

It's definitely doable, and he's not giving out-of-this-world prices, but he
is losing money here.

It is completely worth it though: a lot of backup battery plants are
hilariously overpriced and seeing "oh, this Australian company got 100mWh for
$25MM, we paid $100MM for the same" will probably get some people thinking
about switching to Tesla.

Also worth noting that Tesla's battery costs will drop in the future, so if a
utility company asks them in a year from now for the same $250/kWh rates they
can probably get them.

(Yes, I am 'that battery guy' that makes battery systems and comments on
battery stuff a lot here.)

~~~
schiffern
>he's not giving out-of-this-world prices, but he is losing money here

Note that the quoted price of $250/kWh was given _at the pack level_ (just the
Powerpacks).[1] So the total project cost should be expected to exceed $25
million after including shipping, tariffs, site preparation, installation,
bidirectional inverters, and interconnection.

>build surrounding hardware, AND install it in 3 months

The nice thing about the Powerpack is that they need very little surrounding
hardware. The units are rated for outdoor installation, and they just forklift
into place to a concrete pad. A group of Powerpacks (4-8) shares a common bidi
inverter, which is wired to the grid interconnect on site. Done.

The obvious thing to do would be to construct a building to house the packs
and protect them from the elements, but I'm not sure that makes economic
sense. These are _exothermic_ devices when operating, so a big challenge will
be cooling and ventilating the building. And if you're making a building just
to spend capital and energy to ventilate it, was it really worth it to enclose
weatherized equipment?

It might make sense in hot climates to put a solar "carport" over the
batteries to shade them and reduce cooling load. Tesla has one that's supposed
to be cheap to install.[2]

I expect the economically "right" answer (open air install, solar canopy, or
prefab building) depends on local climate, expected battery duty cycle, and
financing. Not to mention factors like your boss saying "100 days or it's
free." ;)

>he needs to get about 1% of yearly global li-ion battery production to
Australia

In 2013 Tesla gave global production as 34 GWh of cells.[3] 100 MWh works out
to 0.29%, and I don't expect cell production has gone DOWN since 2013. So if
you're looking for an order-of-magnitude, 0.1% would be less wrong (in both
the multiplicative and the additive sense).

The completed Gigafactory is expected to produce 150 GWh/year, so this is only
0.06% of that. Unfortunately I haven't seen reliable numbers about the
production volume at present (with about 14% of the planned 13.6 million ft^2
footprint completed, and probably half of that outfitted for production). I
naively estimate the Gigafactory is currently producing at about 2% planned
final capacity, so 100 MWh represents around 12 days of production.

[1]
[https://twitter.com/elonmusk/status/840096176678420481](https://twitter.com/elonmusk/status/840096176678420481)

[2]
[http://www.solarcity.com/newsroom/press/solarcity%E2%80%99s-...](http://www.solarcity.com/newsroom/press/solarcity%E2%80%99s-new-
zs-beam-solar-carport-system-makes-it-faster-cheaper-easier-and-safer)

[3] [https://c1cleantechnicacom-wpengine.netdna-
ssl.com/files/201...](https://c1cleantechnicacom-wpengine.netdna-
ssl.com/files/2014/09/image2.jpg)

~~~
owenversteeg
The source in that image from Tesla are extremely suspicious. A Google search
for "IIT Takeshita" gives you only that image. Further research took me to
this page. [http://www.iit.co.jp/](http://www.iit.co.jp/), where I got the
plain text "I'm sorry. It is under construction. Please wait."

By the way, your own sources contradict each other - even if you _do_ believe
that image from Tesla, the Gigafactory's completed capacity is 35 GWh/yr. This
blog post states the same [0]. The segment which is done is cool, but it is
surrounded by construction equipment and I doubt it is producing very many
cells.

Finally, since I doubt you're in the battery industry, there are two very
important numbers: production capacity and production. For example, 2014
worldwide production capacity was almost 30 GWh, but worldwide production was
only 5.4 GWh [1]. This is due to a lot of factors, but ultimately only a
fraction of manufacturing capacity is used at any given time. A lot of graphs
that you see on blogs will conflate the two.

[0] [https://www.tesla.com/blog/battery-cell-production-begins-
gi...](https://www.tesla.com/blog/battery-cell-production-begins-gigafactory)

[1] [http://evobsession.com/wp-
content/uploads/2016/04/image-23-e...](http://evobsession.com/wp-
content/uploads/2016/04/image-23-e1461122689735.jpg)

~~~
schiffern
>The source in that image from Tesla are extremely suspicious. A Google search
for "IIT Takeshita" gives you only that image.

It's not easy to find, but I did some digging. Looks like an analysis of the
global battery industry, with the 2013 version presented at the 2013 Battery
Japan conference.[1] From other citations I found[2][3] it's clear the speaker
is Hideo Takeshita, who in 2001 was the vice president of IIT (the Institute
of Information Technology Ltd.)[4] and in 2014 was the president of a battery
market research firm called B3 Corporation.[5]

Sure the document isn't freely available online, but given the commercial
nature of the content that hardly seems suspicious.

>your own sources contradict each other

Sorry, I should have been more clear. It gets _very_ confusing since it's a
moving target, and you can rarely tell who is using what source (and when that
source is from).

The original capacity announced in their blog post[6] on 2014-02-26 was 35
GWh/yr at the cell level and 50 GWh/yr at the pack level (importing 15 GWh/yr
of cells).[7] That's what you're seeing on the chart.

Later at the 2016 shareholder meeting on 2016-05-31, Tesla CEO Elon Musk
announced that they were going to triple the final production capacity at the
Nevada Gigafactory.[8]

[1]
[https://web.archive.org/web/20130207162628/http://www.batter...](https://web.archive.org/web/20130207162628/http://www.batteryjapan.jp/en/Home/)

[2] [http://www.sdle.co.il/AllSites/810/Assets/c%20pillot-
avicenn...](http://www.sdle.co.il/AllSites/810/Assets/c%20pillot-
avicenne.pdf#42) (page 42)

[3]
[http://www.avem.fr/docs/pdf/AvicenneDiapoXining.pdf#21](http://www.avem.fr/docs/pdf/AvicenneDiapoXining.pdf#21)
(page 21)

[4] [http://electronicdesign.com/energy/li-ion-batteries-reach-
hi...](http://electronicdesign.com/energy/li-ion-batteries-reach-higher-
performance)

[5] [http://wardsauto.com/miscellaneous/battery-experts-seek-
lowe...](http://wardsauto.com/miscellaneous/battery-experts-seek-lower-costs-
better-technology)

[6]
[https://www.tesla.com/blog/gigafactory5](https://www.tesla.com/blog/gigafactory5)

[7]
[https://www.tesla.com/sites/default/files/blog_attachments/g...](https://www.tesla.com/sites/default/files/blog_attachments/gigafactory.pdf)

[8] [http://electrek.co/2016/05/31/tesla-triple-battery-output-
gi...](http://electrek.co/2016/05/31/tesla-triple-battery-output-
gigafactory-1-150-gwh-elon-musk/)

------
roenxi
If Australia's power problem can be solved by two billionaires on twitter for
$25 million, then it isn't anywhere near as problematic as I've been led to
believe. There are enough problems with the grid that any solution needs to be
discussed in the context of what problem is being solved.

The latest I've seen (
[https://www.aemo.com.au/-/media/Files/Gas/National_Planning_...](https://www.aemo.com.au/-/media/Files/Gas/National_Planning_and_Forecasting/GSOO/2017/2017-Gas-
Statement-of-Opportunities.pdf) ) suggests that there is a risk of not being
able to produce enough at all, let alone keep the grid stable.

My read of that report is that current "Aussie Power Woes" are the ageing
generator infrastructure, not grid stabilisation which was a politically
interesting but otherwise relatively minor hiccup a few months ago in South
Australia.

In addition to those two there are cost troubles brewing related to the cost
of maintaining infrastructure for power (poles & cables), and energy prices
are moving upwards. May or may not be related to generators capacity, I don't
know.

~~~
senectus1
Its not "Australia's" Power problem, its the state of South Australia...

~~~
nl
It's not as simple as that.

There was power rationing in NSW a couple of weeks ago, and Victoria's largest
power station is about to be closed down.

There is plenty of power (especially in SA), but it is at the wrong times.
Batteries (or any kind of storage device) are the perfect solution.

------
smikhanov
The article says he promises to deliver and install a working energy storage
system in 100 days, not to fix the "woes". Brilliant PR move though: he just
closed a $25M deal on Twitter and used this as a good publicity for himself.

~~~
M_Grey
Musk is a true and absolute master of PR. He understands what each audience
wants to hear, and _also_ understands that his messages to each need to be
consistent with each other. He paints himself as a dreamer reaching for the
stars, while solving what problems we have on Earth. It's amazing... and the
result is that people who would normally be suspicious of him, love him and
truly want him to be their hero.

~~~
forgot-my-pw
Funny, I feel his PR team is probably stressing out all the time.

~~~
M_Grey
Why? He talks about going to Mars and people who would normally grimace, swoon
because they _so_ want to believe it. If not for his constant PR assault,
focus might actually shift from his dreams, to things like how he treats the
people who work for him.

------
dkbrk
The title does not follow from Elon's actual tweet. He promised to "get the
system installed and working 100 days from contract signature". He does not
guarantee that such an installation would be a panacea for all "Aussie Power
Woes".

------
cstross
Musk quoted $25M for the batteries?

I'm guessing that this escapade — if it works — is going to be more productive
than $25M in marketing/advertising spend.

------
ewood
Anyone here have deep insight on this? I thought a large part of the problem
is the way that the Australian Energy Market Operator (AEMO) is operating the
market? Their mandate seems to be to prioritise price over reliability causing
artificial shortages when there are not enough bids to form a market for
excess load.

It appears that there is sufficient capacity in SA but providers are holding
out for higher prices or not wanting to meet demand because they are providing
higher priced capacity from their operations in other states.

~~~
londons_explore
In a properly working market, at the point the power grid fails due to lack of
supply, the spot price should be infinitely high.

Given that, no sane supplier would refuse to sell given they would be making
unlimited profit. Hey, I'd be connecting up my windup flashlight if I got paid
$999,999,999 per kilowatt hour.

The issue must be a bad market. Either people aren't paying for what they use,
there isn't sufficient transmission capacity to have a sufficiently large
market to avoid local monopolies, there are price caps or floors, the market
isn't fast enough (no automated trading), or new entrants are limited from
participating.

In a correctly working market, electricity never fails because all people
using electricity at the time of the failure would be paying an infinitely
high price, and therefore be bankrupt.

~~~
alextheparrot
Maybe the utility derived from having electricity doesn't make the good
actually worth the prices you are saying? A seller makes no money if they
price their good so far above market that there is no demand for it, not
infinite.

~~~
Callmenorm
You're missing his point. Prices steadily go up as demand increases so
suppliers bring on more (expensive) capacity to meet. You never get to the
failure point unless demand exceeds all possible supply capacity. He just took
this argument to the extreme.

~~~
alextheparrot
I believe I completely understood his point and my comment responded to that
the price does not approach infinity, because no one will logically pay a
price approaching infinity. The root cause of this is that I will only
purchase something if I think the utility obtained from having it is equal to
or greater than the utility my currency could purchase elsewhere. I don't have
a perfectly inelastic demand for electricity.

Even if a good is quite scarce (Such as electricity in a blackout), the price
is dependent on demand. Low supply does not inherently make a good expensive.

------
dghf
There's an irritating mix-up between power and energy throughout the article
and in the tweets it's sourced from. Cannon-Brookes asks for a 100 MW (power)
system; Musk responds with a price of $250 per kWh (energy), based on a >= 100
MWh (again, energy) system. Retail price for electricity in South Australia is
on the order of AU$0.30 - AU$0.40 per kWh (~US$0.23 - US$0.30), so it's
presumably a typo on Musk's part; but the article repeats and compounds it by
talking about Tesla supplying "up to 100 megawatt hours of power". (If I've
done my sums right, 100 MWh is about the amount of electricity produced in
Australia as a whole every 15 seconds, on average.)

------
gonzo41
Fingers crossed this happens. Currently we have a government thats talking up
clean coal :(

~~~
posnet
It is a sad day when a politician unironically holds up a lump of coal in
parliament and pronounces look how clean it it.

~~~
kogepathic
It also doesn't make any sense, as a number of studies have shown that
renewables employ more people per MWh than fossil fuel energy sources like
coal. [0]

So if the politicians point is that renewables destroy jobs, the evidence does
not support this claim.

[0] [https://web.stanford.edu/group/emf-
research/docs/occasional_...](https://web.stanford.edu/group/emf-
research/docs/occasional_papers/OP64.pdf)

~~~
fennecfoxen
> renewables employ more people per MWh than fossil fuel energy sources like
> coal.

Anyone who suggests that's a feature, and not a defect, is either a fool or
has designs on your wallet.

~~~
kogepathic
> So if the politicians point is that renewables destroy jobs, the evidence
> does not support this claim.

My point isn't that more people employed = cheaper energy. Obviously that's
not how economics works.

My point was, if politicians are advocating for building out more fossil fuels
because renewables "take away jobs" that argument has been proven false. [0]

[0] [http://fortune.com/2017/02/21/donald-trump-jobs-coal-
mining-...](http://fortune.com/2017/02/21/donald-trump-jobs-coal-mining-solar-
energy/)

------
yellow_viper
surreal we live in a time when discussions like these are public and on
twitter.

~~~
Anderkent
Isn't the discussion happening in public a good thing?

~~~
wastedhours
Good, and surreal.

~~~
mirimir
What will be surreal is watching WWIII break out in real time ;)

~~~
adventured
I know you're mostly joking, but it's not going to happen. There aren't enough
powerful countries on the theoretical opposition side to sustain a WW3
engagement.

There are only a few consequential military powers today that can seriously
attempt to fight a major war outside their own borders while simultaneously
enduring opposition: US, Russia, China, Germany, France, UK. All the next tier
powers down from that can be trivially crippled, locked down to their own
territory and prevented from substantially joining the battle. IE there can be
no WW3 until or unless the world changes a lot.

~~~
lefstathiou
To add to that, you need a large and consistent oil supply to sustain a war on
that scale and it is no accident that the North American, South American and
Middle Eastern oil regions are effectively all under US control.

~~~
mirimir
Not Russia, though. But anyway, I misspoke. Not a protracted war.

------
zachruss92
The can do optimizim here is amazing. There is obviously a bit of PR here, but
that's what I've come to respect about Elon Musk. Promise the moon then
deliver, literally.

If private citizens using technology to solve a nation's crippling issues is
awesome.

~~~
drcross
It's refreshing in a world thats increasingly in a stranglehold from
regulation and restriction that if humans really want to do something on a
massive scale that we could potentially pull it off.

------
SturgeonsLaw
> Australian Prime Minister Malcolm Turnbull blamed the power cut on the
> state’s rapid take-up of renewable power

So typical of Australian politics. Any event, positive or negative, is used to
attempt to score cheap political points. We have no leaders with long term
vision. There is no discussion about building Australia's future, only mud
slinging at the opposite party. The few large scale nation building projects
that commence are gutted once the opposing party is elected, and in the end,
the people who lose out the most are the Australian public.

"Coal is the future" \- Tony Abbott

~~~
mstade
Not just Australian politics, I'm afraid. :o(

------
m23khan
Why not take up a better challenge...solving Pakistan's power woes in 1 year
:-D

------
jimmcslim
Having made these public commitments, Musk and Cannon-Brookes had better
deliver on their commitments within '100 days', or they are going to
unfortunately pour petrol on the bonfire that is any attempt at rational
energy debate in this country.

There are enough conservative elements here already making misinformed claims
about renewable energy that any failures or compromises, even for good
technical reason, will be seized upon.

~~~
jnsaff2
Note how Musk promised 100 days _from signing_. This seems like a very
reasonable bet that the negotiation will take a long time and if things look
promising they can start the production early.

~~~
londons_explore
This is only the battery capacity of 1000 cars.

That about 15% of tesla's car production over that time period.

I bet they have sufficient supply chain slack to accommodate that if they need
to.

------
CodeSheikh
Musk wants to capture market. And these days "100 days" is a good term to
through around when it comes to meeting expectations and deadlines. But if
anyone can do it it is still Elon Musk as of now.

------
mimo777
I doubt Australia's power problems have anything to do with technology.

------
Taylor_OD
We live in an age where multi million dollar government contract deals are
happening publicly on Twitter. Amazing.

~~~
will_hughes
Neither person mentioned in the article are in government.

------
ehnto
That is very arogant, even if I believe he could do it. Australian power
issues are endemic to the regions unique requirements, and born out of long
term political and economic policy discussions.

I am honestly surprised that someone as smart as Elon wouldn't recognise both
the crassness of a comment like that, and that he likely doesn't fully
understand the political landscape that caused the situation.

Good luck getting through the red tape and border crossing negotiations. To
say nothing of the near 50 degree weather beating down on old infrastructre
that spans thousands of very sparse kilometers.

Edit: to clarify, it is arogant because he is stirring an already
controversial pot in a country that is frankly none of his business. I am from
the state that is enduring the power troubles, and the technology in use is
not the core of the issue, it is the artificial market policies dictating the
generation of power. Having batteries wouldn't solve that, as having people to
pay for the energy generation is the mechanism that is actually broken.

~~~
arbuge
One possibility is that he realizes he won't be taken up on the offer, which
also means that there's no chance he'll be tested on it. In the meantime, free
publicity. His comment is on most major news channels today.

~~~
marktangotango
Indeed, Musk is a showman. Early in spacex they put a falcon 1 on a trailer
and drove it to Washington, D.C. Essentially a privately funded and built
ballistic missile, on a trailer, in front of the capital building. That turned
some heads. This was before it flew so 2002 or 2003.

~~~
lorenzhs
For more on that story, see
[http://www.thespacereview.com/article/70/1](http://www.thespacereview.com/article/70/1)
(article has two pages, link to the second at the very bottom)

~~~
mmjaa
>The second stage of the Falcon 5 will be similar to the Falcon 1, and the
Falcon 5 will sport a larger payload fairing, three meters in diameter. Like
the Falcon 1, the Falcon 5’s first stage is designed to be recoverable, and
hopefully reusable.

Truly amazing how far we have come from the era described in that article.
Now, we're on the aphelion .. indeed, Musk _has_ landed his rockets safely,
successfully now.

/back-on-topic:

I think Musk might have something with the e-shingle concept, in the
Australian market. All he'd have to do is open-source the thing, and provide
some capital incentives to build a few fabricators in the Australian deserts,
closer to the source of the materials needed..

