TESLA, the company of tech billionaire Elon Musk, will partner with French renewable energy developer Neoen to build the “world’s biggest lithium ion battery” in South Australia.

And if they don’t deliver the battery in under 100 days from the contract being ticked off, it will be free.

Premier Jay Weatherill announced on Friday that Tesla and Neoen would be tasked with providing the 100MW battery under a “historic agreement”.

Tesla will build the battery, which will store energy generated at Neoen’s 99-turbine wind farm at Hornsdale, near Jamestown in the Mid North.

Seventy per cent of the battery’s generation is to be reserved for government use and the remainder released to the market.

media_camera Tesla CEO Elon Musk with South Australian Premier Jay Weatherill. Picture: Tait Schmaal

Under the agreement between Mr Musk and the State Government, if the battery is not delivered by Tesla within 100 days of the grid interconnection agreement being signed, it will be free.

Mr Musk said he’d insisted on the 100-day clause he promised in a Tweet to Atlassian founder Mike Cannon-Brookes just three months ago.

“That’s what we said publicly, that’s what we’re going to do,” he said.

Mr Weatherill said it was an “extraordinary offer” and would help South Australia become a world leader in battery storage technology.

“Battery storage is the future of our national energy market, and the eyes of the world will be following our leadership in this space,” he said.

“This historic agreement does more than bring a sustainable energy giant in Tesla to South Australia, it will also have some significant economic spin-offs.”

There were 91 international bidders, according to Mr Weatherill.

Federal Energy Minister Josh Frydenberg said he welcomed the investment but it was “small compared to the scale of the problem the (State) Government created”.

“The new battery is 129MW hours compared to the 1000MW hours of storage at the Cultana pumped hydro project in the Upper Spencer Gulf ... and the 350,000MW hours of additional storage we will get from Snowy Hydro 2.0,” Mr Frydenberg said.

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Speaking at a media conference in Adelaide, the Tesla chief executive admitted his gambit to deliver a lithium ion battery which is three times more powerful than any other system on Earth, within such a tight time frame, was “risky”.

“There is some risk because this is going to be the largest battery station in the world by a significant margin,” Mr Musk said.

“This is not a minor foray into the frontier, it’s going three times further than anyone’s gone before.

“We’re confident in our modelling techniques and in the design of the system but whenever you make something three times bigger than anything that’s come before, there’s always some risk.”

The battery is expected to create many local jobs during the construction phase but Mr Musk says there will be few ongoing positions since the system is designed to be self-sustaining.

He said the battery was a “fundamental efficiency improvement for the electricity grid”.

“You can essentially charge up the battery packs when you have excess power and the costs of production is very low and then discharge it when the cost of power production is high, and this effectively lowers the average cost per watt hour to the average customer,” he said.

The announcement comes during a rocky week for the billionaire entrepreneur, in which shares in Tesla plunged almost 15 per cent.

The plunge wiped $9 billion from the company’s balance sheet and knocking it off the perch as America’s most valuable car maker, in favour of General Motors.

The electric car maker’s bottom line has been hit by bad news, starting with a tweet in which Mr Musk said that the company anticipated production of 20,000 Model 3 cars in December, which was below previous estimates.

Local company Consolidated Power Projects won a contract for ongoing work and maintenance.

Neoen deputy chief executive Romain Desrousseaux said the Hornsdale Power Reserve would become the state’s largest renewable generator.

“South Australian customers will be the first to benefit from this technology which will demonstrate that large-scale battery storage is both possible and now, commercially viable.”

Neoen Australia managing director Franck Woitiez said the battery would operate in the frequency and ancillary services market, creating competition and driving down prices.

“The wind farm is selling electricity between half and two-thirds of the average price of the market,” he said.

“So with the storage we’ll be able to bring this cheaper electricity ... when the people need it and not only when the wind blows.”

SA Opposition Leader Steven Marshall said it was great an entrepreneur like Mr Musk was working with the state.

“Unfortunately Mr Musk is here because the government has delivered the most expensive and least reliable electricity network in the nation,” Mr Marshall said.

THE $550M PLAN TO SOLVE SA’S POWER CRISIS

Mr Musk claimed he could fix SA’s power crisis for $33 million and in under 100 days after Mr Weatherill revealed his $550 million plan to secure the state’s energy supply in March.

The Government’s six-point plan to provide energy security for SA involves:

BUILDING a State Government-owned, fast start gas-fired power station that can come on when the market does not provide enough energy to keep the lights on. It is expected to cost about $360 million. No site has yet been selected. It would be 250MW, enough to deliver close to 10 per cent of SA’S peak demand.

SUPPORTING construction of the biggest battery in Australia — and possibly the world — as part of a $150 million spend on a new renewable technology fund.

ENCOURAGING the construction of a new privately-owned power station using a Government bulk buy power contract.

INCENTIVISING the extraction of more gas for use in SA power stations, through a taxpayer-backed exploration fund.

GIVING the SA energy minister powers to override other regulators and force power stations to fire up in times of need.

CREATING an “energy security target”, which requires retailers to buy 36 per cent of their power from baseload sources in SA.

Explainer: The plan to fix SA's energy Explainer: The plan to fix SA's energy

The power plan was released after the entire state was plunged into darkness in September last year.

Mr Weatherill claims the plan will reduce bills and blackouts while also creating renewable energy jobs.

In March, he invited Mr Musk to tender for the battery.

“The battery must have a capacity of approximately 100MW and be operational in time for this summer. The private sector will own, operate and maintain the battery,” Mr Weatherill said.