South Australia's big Tesla battery's output and storage will increase by 50 per cent, with help from the State and Federal Government.

Key points: The Hornsdale Power Reserve near Jamestown will be expanded by 50 per cent

The expansion will take the battery's total capacity to 150 megawatts

The upgrade is expected to be completed by mid-2020 and provide more security to the grid

Once labelled the "Hollywood solution" by Prime Minister Scott Morrison, who also likened it to the world's biggest banana or the world's biggest prawn, the expansion will be financed through the Federal Government's Clean Energy Finance Corporation.

French renewable energy company Neoen said it would take the battery's output from 100 to 150 megawatts, with the South Australian Government committing $15 million and the Australian Renewable Energy Agency contributing $8 million.

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Speculation about the expansion has been rife in renewable energy circles after a truck driver filmed several Tesla Powerpacks being delivered to the battery site, near Jamestown in the state's Mid North earlier this month.

It will also expand the battery's storage capacity to 193.5 megawatt hours, allowing it to operate at full power for more than an hour.

The battery was built in 2017 under an agreement between Tesla, Neoen and the former SA government.

Tesla boss Elon Musk flew to Adelaide to announce the battery's construction with then-premier Jay Weatherill, after promising to build it in 100 days or build it for free following a Twitter exchange with Australian tech billionaire Mike Cannon-Brookes.

The arrangement was mocked by several federal ministers, including the newly-installed Prime Minister Scott Morrison.

"By all means have the world's biggest battery, have the world's biggest banana, have the world's biggest prawn like we have on the roadside around the country," Mr Morrison said.

"But that is not solving the problem."

Former SA premier Jay Weatherill alongside Tesla boss Elon Musk in February 2018. ( Facebook )

In a statement confirming the Federal Government's investment in the battery expansion, Energy Minister Angus Taylor said it would improve response times on the worst days when demand was at its highest and the wind was not blowing and the sun was not shining.

"Projects like this, combined with the gas and pumped hydro projects that are coming online, are extremely important to the future integration of renewable energy to the South Australian grid," he said.

The original battery deal, partly funded by taxpayers, saw the battery's owner Neoen reserve some of its output to provide services to help stabilise the electricity grid.

The company claims that arrangement saved energy consumers more than $50 million over the battery's first year of operation.

Expansion expected to reduce retail energy costs

The South Australian Government's commitment to the battery's expansion will see energy consumers benefit from the arrangement even more.

SA Energy Minister Dan van Holst Pellekaan said it would result in a more secure and affordable power supply for the state.

The expansion is hoped to save consumers money. ( Tesla Motors: Timothy Artman )

"We know that the 100 megawatt capacity of the existing Hornsdale battery has saved South Australian electricity consumers $40 million per year since its inception," he said.

"This 50 per cent increase in capacity to the battery, plus the additional services that we will receive, will add an additional $47 million per year of savings to South Australia electricity consumers.

"The savings to the cost of the wholesale electricity will then, a year [or] two down the track, flow through to the retail costs that consumers pay."

Mr van Holst Pellekaan said that the expansion would enable a much faster response to system disturbances and store more power for peak demand.

"We have in the past had blackouts in South Australia, because we've had an insufficient quantity of electricity to make demand," Mr van Holst Pellekaan said.

"But we've also in the past had blackouts because the quality of the electricity has not been good enough.

"[The expansion] means that the wholesale power reserve will be able to increase or decrease frequency, increase or decrease voltage as necessary within milliseconds so that we can keep the quality to 240 volt 50 hertz supply, exactly where it needs to be."

The expansion is expected to be completed by July next year.

Tesla boss Elon Musk flew to Adelaide to announce the battery's construction. ( AAP: Ben Macmahon )

Opposition energy spokesman Tom Koutsantonis said Tuesday's announcement was a validation of the former state government's energy plan.

"It's a vindication that when South Australians work together, we can come up with breakthrough solutions," Mr Koutsantonis said.

"I just hope the Premier recognises that when he criticised the energy plan and the big battery, that criticism was misplaced.

"Indeed, I hope the Prime Minister recognises that by criticising the big battery as nothing more than a Big Banana or a Big Pineapple … that those type of demeaning remarks towards this cut-through technology doesn't serve the nation.

"A lot of the other states are still grappling with that transition, South Australia did it before everyone else.

"That's why I think we're ahead of the game."

Battery to replicate power station

The expanded battery could be used to replicate some of the features of a traditional coal or gas power station, to support further renewable energy expansion in South Australia.

The state has world-leading penetration of wind energy installed, but production is often curtailed because of technical limitations to the grid.

One of those limitations is a lack of inertia, a mechanical by-product of traditional synchronous coal, gas or hydro generators.

In a first for the National Electricity Market, the battery will also be used to test and demonstrate "digital inertia", replicating those services.

The Australian Renewable Energy Agency said the tests could help prevent the need to curtail wind or solar energy production.

The expanded battery could also help support increased power flow across the interconnector which links South Australia to Victoria, helping lower spot prices in both states.