Billionaire Elon Musk is seen as a saviour for South Australia with his battery plan for our power crisis, but is it worth charging ahead?
HIPSTER billionaire Elon Musk is being touted as a potential saviour from South Australia’s energy crisis. But can he do it?
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HE shot to fame and fortune as the tech entrepreneur behind online payment system PayPal and is capturing imaginations with a plans to put people on Mars.
Back on Earth, Elon Musk is also the brains of battery company Tesla. It promises to unleash electric cars on freeways across the world and help solar-panelled homes quit the old power grid entirely.
If you accept the sales pitch, which is usually delivered in open-necked shirt and in front of a flashy promo video, Musk is a man on the cusp of both the world and outer space.
It’s an intoxicating message with an undeniable draw to the dreamer inside all of us. And, in the tech tycoon’s typical fashion, it was by tweet last week that he chose to send SA’s hopes soaring.
Responding to fellow tech business celebrity Atlassian’s Mike Cannon-Brookes’ challenge to build a 100MW battery farm in SA, Musk tweeted: “Tesla will get the system installed and working 100 days from contract signature or it is free. That serious enough for you?”
Immediately, social media swooned. Phone hook-ups were arranged with Premier Jay Weatherill and Prime Minister Malcolm Turnbull. A big problem had found an exciting new-age solution.
Maybe.
Eco-focused Californian celebrities, and others like them, love Musk.
They can’t wait to get their mitts on new toys like his electric cars, or sleek home battery packs that let them go low-carbon.
However, those who have closely studied Musk’s several businesses and the markets they play in have growing doubts about the billionaire’s ability to survive many of these great new gambles.
Musk’s vast empire is valued at about $44 billion, accrued in fast time over about a decade. But it is burning cash on massive investments, and hoping they come off.
Musk’s biggest current bet is the development of a giant desert factory worth about $5 billion.
When complete in about 2020, the Nevada “gigafactory” is set to become the biggest building in the world by footprint and capable of turning out an incredible 1.5 million electric cars a year.
It began producing lithium-ion battery cells in January this year, with less than 30 per cent of the total factory built. The cells will go in home and industrial batteries, plus the sexy Model 3 car.
Already, the Model 3 car is under assault from a smorgasbord of soon-to-be-launched electric cars from traditional car makers.
Consumers will have decent choice of fixtures and gadgets, with offerings from Nissan and Audi as well as luxury badges Porsche, Jaguar and Aston Martin.
Those companies all have factory infrastructure in place, and will compete hard on price.
Musk does currently offer the leading home battery product.
The average person with solar panels can buy in for about $10,000, and slap a Powerwall back-up pack on the residence.
Australian consumer website Choice currently models the payback time, or how long it takes for the saving on power bills to cover the cost of buying the Powerwall kit, at 15 years.
However, that is greatly reduced if you live in the Adelaide City Council area and can tap into the generous $5000 per Powerwall ratepayer subsidy on offer.
Plus, it’s hard to put a price on the peace of mind that is having your own back-up when load shedding hits on a 42C day.
But an important consideration is an expected collapse in battery prices over the next few years.
Like solar panels, battery prices are expected to tank, and delay many people from buying now.
This also raises the competitive risks for Musk, as other companies work on new systems.
The lithium ion batteries offered by Tesla, both in the Powerwall and battery farm-type back-up plants being promoted as an SA fix, are little different from that which powers an iPhone.
For all its advantages, lithium ion is increasingly being seen as a limited technology which is no longer fit for purpose. As anyone who has kept a smartphone for more than a couple of years will know, lithium ion batteries fast lose their capacity. The same is true of the Powerwall, and battery farm technology that have a useful life span of about 10 years and hold less by the day.
The Massachusetts Institute of Technology last year launched a new lithium and antimony prototype battery it claims is much hardier and cheaper than lithium ion for grid-scale purposes. Promising work is also afoot with titanium batteries that could charge a phone in two minutes.
Musk’s SpaceX program, which wants to start private space expeditions, is also a hugely capital-hungry enterprise that could pay off, or not. It has suffered a rocket explosion and remains sensitive to changes in government regulation and the issuing or not of NASA contracts.
Also raising concern, his various businesses are structured in what The Economist has referred to as an “Asian and Italian business federation” model, where each relies on another. SolarCity uses batteries made by Tesla and SpaceX has made loans to SolarCity. They rise and fall together.
But for people full-on about batteries for SA, there’s an increasing number of options.
Many less famous companies which are much closer to home than Mars, Nevada or Silicon Valley, say they have technologies with equal or greater potential to help solve SA’s power crisis.
A solar thermal power plant, which uses mirrors to charge a big battery in the morning and can then release power at night, has been proposed for Port Augusta. Its backers promise a lifespan about three times that of Tesla and say it is also likely to be more competitive on price.
Adelaide-based 1414 Degrees produces a silicon storage device with a capacity about 36 times that of Tesla’s product. Local firm Redflow also pitches a zinc-bromide battery option.
Musk is almost certainly the most charming and charismatic of the new technology billionaires.
His ambition for both Earth and space definitely give him the most inspiring story to tell.
He is at the bleeding edge of what is likely to be the biggest innovation in energy since electricity was discovered, and seeking to capitalise with a brand that boasts his bravery.
But others are catching up fast. And it’s possible they will see more by standing on his shoulders.
ELON’S EMPIRE
■ Founder of SpaceX, which seeks to take private missions into space.
■ Chief executive of Tesla Inc, which is making batteries and electric cars.
■ Chairman of SolarCity, which designs and sells as well as installs photo-voltaic panels.
■ Co-chair of OpenAI, a non-profit artificial intelligence research company.
■ Co-founder of a company that became digital payment service PayPal.