Tesla's Powerpack battery has already made $17m

Despite a rough year for the electric car manufacturer, Tesla's Powerpack battery has recouped around 25% of its initial investment


Tesla's South Australian-based Powerpack battery project has already started to show significant financial success, as, after costing $66m to be developed, it reportedly made $17m in the first six months of operation, according to figures released by Neoen, Tesla's partner in the project. This means it has recouped nearly 25% of its initial investments and is on target to reach at least $20m in revenue before the end of the year.

Currently, when maintenance is required on the power grid in Australia, the energy market operators call for frequency control and ancillary services (FCAS) which means large gas generators and steam turbines will kick in to compensate for the loss of power, at great expense. According to Electrek, electricity rates can reach $14,000 per MW during FCAS periods.

The 100MW/129MWh Powerpack project provides the same grid services as FCAS but more quickly, with significantly lower operating costs and zero emissions using a battery system.

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At the Australian Energy Week conference in Melbourne in May, McKinsey and Co. partner Godart van Gendt stated that battery storage would "play a very big role" in the transition to renewables in Australia.

"In the first four months of operations of the Hornsdale Power Reserve (the official name of the Tesla big battery, owned and operated by Neoen), the FCAS prices went down by 90%," Gendt said.

"The 100MW battery has achieved over 55% of the FCAS revenues in South Australia. So, it's 2% of the capacity in South Australia achieving 55% of the revenues in South Australia."

The success of this project will be a major win for Tesla, as it has faced a very rough year due to questions about its financial health, ability to build cars at scale and widespread reports of CEO Elon Musk's erratic behavior, among other issues.

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