Tesla Claims It's Being Underpaid Because Its Batteries Supply Power too Fast

Tesla's Powerpack project in South Australia is proving efficient since going into operation. However, the company says that it is being underpaid because the battery system is too quick for the billing system.
Kashyap Vyas

Tesla complains of unfair pay for its energy supply services in South Australia because their supply is too fast for the billing system.

This is not a PR act to publicize superiority of Tesla’s energy storage solutions, but a real headache for the innovative enterprise.

It was in response to Energy Security Board’s consultation paper for National Energy Guarantee that Tesla claimed 30 to 40% of their total supplies have not been counted by the AEMO. This has resulted in major loss of the profit by Tesla.

The archaic rules of the Energy Department and outdated technology employed in registering response rate are at the core of the problem.

In case of power failure or maintenance work on a power grid, a backup source or Frequency Controlled Ancillary Services (as it is called) is needed for uninterrupted power supply. Earlier, gas generators were used to fill in this gap but they are slow and very costly.

The ‘gas cartel’ often make unscrupulous profits by hiking up the prices many-fold the regular value.

Tesla changed the whole scenario by setting up 100 MW/129 MWh Hornsdale Power Reserve in South Australia, with world’s largest Li-ion battery, for FCAS services. Its advanced technology responds to power loss in a fraction of a second; with some source claiming its response time to be 200 milliseconds only.


But its fast services do not go well with energy operators who are equipped to register first response time only 6 seconds after the power loss. This system worked well with gas generators but for Tesla, it means about 6 seconds of unrecorded services and hence the monetary loss.

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Tesla has eliminated the shortcomings of the FCAS services to a great extent. The electric battery storage provides instant ‘emission-free’ power to critical system security services and most importantly the services are cost-effective. The AEMO has managed to save a large sum which was previously filling up the pockets of gas cartels.

The consumers are also enjoying the benefit of the technology, but Tesla claims to be the only party at loss. Tesla has not provided a dollar figure for their loss but the loss is real and ever-increasing.

Tesla’s installation reportedly accounts for about 30 percent of the capacity for FCAS in South Australia market. This ensures that their complaints would not go unheard or undealt.

The problem, however, lies with the rules which are modeled to cater to the needs of fossil fuel solutions. AEMO has not specified its stand but the slow mechanism of bureaucracy suggests that the solution will take time.

Tesla’s complain highlights their greater problem: an inability to cash in the energy storage. The market is still immature for the new technology.

The new ventures are already trying to figure a way around. The financial model for new 25 MW/50 MWh and 30 MW/30 MWh batteries planned to be installed in Victoria by Tesla and Fluence respectively, testifies this. Both the enterprises are being heavily compensated by state and federal subsidies.

The battery energy storage has proved to be beneficial and effective. Tesla has proposed world’s largest virtual power plant in South Australia with 250 MW of capacity and 650 MWh of storage and many more projects are on the way.

The ubiquitousness of battery storage in the next decade won’t be a surprise.

It is high time that authorities heed to the needs of renewables and create a supportive ecosystem for them.

Via: Electrek

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