South Australia will be home to the world's largest lithium ion battery thanks to a historic agreement between Tesla and the State Government.

And Tesla boss Elon Musk is promising to build it in 100 days, or it's free.

Key points: A 100-megawatt (129 megawatt hour) battery is to be in place before summer

A 100-megawatt (129 megawatt hour) battery is to be in place before summer It will provide energy stability for SA and also be emergency back-up for shortfalls

It will provide energy stability for SA and also be emergency back-up for shortfalls Elon Musk is sticking by a "100 days or free" promise for SA taxpayers

Tesla will build the 100-megawatt battery which will store energy from French renewable company Neoen's Hornsdale Wind Farm near Jamestown, which is still under construction.

The project will be in place before summer.

Mr Musk's '100 days or it's free' pledge starts once the grid interconnection agreement has been signed.

Loading

But the promise could leave Mr Musk significantly out of pocket if he fails to deliver to deadline.

Loading

He estimated it would cost him "probably $50 million or more" if the 100 days lapse without the battery installed.

"If South Australia is willing to take a big risk, then so are we," he said.

South Australia has been battling power problems since a statewide blackout in September 2016.

In response, the State Government announced a raft of measures to improve stability, including building a 100-megawatt (129 megawatt hour) battery, and owning and operating a $360 million gas-fired plant.

The Government said the battery would put the state at the forefront of global energy storage technology.

The battery will stabilise the network at all times and will provide back-up power if there is a shortfall.

Mr Musk, who is also the head of space exploration company Space X, told a press conference at Adelaide Oval that this project was "not a minor foray into the frontier".

"There is certainly some risk, because this will be the largest battery installation in the world by a significant margin ... the next biggest battery in the world is 30 megawatts," Mr Musk said.

He said it was "three times further than anyone has gone before" and would "stabilise the grid and buffer power".

"You can essentially charge up the battery packs when you have excess power when the cost of production is very low ... and then discharge it when the cost of power production is high, and this effectively lowers the average cost to the end customer," Mr Musk said.

"It's a fundamental efficiency improvement for the grid."

Mr Musk initially made the 100-day pledge via Twitter in March, after being alerted to South Australia's power woes by billionaire tech guru Australian Mike Cannon-Brookes, who co-founded software company Atlassian.

The pledge caught the attention of the twittersphere and surprised Mr Cannon-Brookes, who tweeted "Holy s#%t".

Mr Musk, who will visit Jamestown before he leaves Australia, said the battery would be "nicely arranged white obelisks".

"We're going to make an effort to have it look good, that it will also be a tourism destination."

SA to lead battery storage technology

Mr Weatherill said the state had led the nation in renewable energy and would now lead the world in battery storage.

"It will completely transform the way in which renewable energy is stored, and also stabilise the South Australian network as well as putting downward pressure on prices," he said.

"It opens up new opportunities for renewable energy in this state, in this nation, and around the world, to be dispatchable [to be used]."

Mr Weatherill said the Government had about 91 international bidders for the battery project.

The Hornsdale Wind Farm is still under construction. ( Supplied: Hornsdale Wind Farm )

"That was of course assisted by a little bit of Twitter exchange in the few days before we released our plan between Elon Musk and also Mike Cannon-Brookes."

"This historic agreement does more than bring a sustainable energy giant in Tesla to South Australia, it will also have some significant economic spin-off," Mr Weatherill said.

Loading

Neoen deputy chief executive Romain Desrousseaux said the company was proud to work with the Government and Tesla to expand the Hornsdale Wind Farm in Jamestown in the state's Mid North.

"At 100MW and 129MWh, the Hornsdale Power Reserve will become not only the largest renewable generator in the state but also home to the largest lithium ion battery in the world, with our company's long-term, direct investment in South Australia growing to almost $1 billion since 2013," he said.

Climate Council chief councillor Professor Tim Flannery said the state was moving away from polluting, expensive and inefficient fossil fuels.

"South Australians are witnessing first hand how swiftly this technology can be built and used, with the battery expected to be up and running this summer," Professor Flannery said.

"South Australia joins the likes of California as a world leader in demonstrating how renewable energy and storage technologies can power our economy cheaply and cleanly."