Two years ago, Tesla (TSLA -8.78%) did the (seemingly) impossible.

CEO Elon Musk made a personal promise to Australian billionaire Mike Cannon-Brookes to complete a 100-megawatt (129 megawatt-hour) superbattery in just 100 days -- or Tesla would do the work for free. Then he did exactly that.

As a result, for the past two years, South Australia has benefited from the "Tesla Big Battery" (TBB).

Australia's Sydney Morning Herald reports that since Tesla completed its battery warehouse, blackouts in the region have become "vanishingly rare." They're not entirely unheard of, however. In January 2019, for example, SA Power Networks was forced to apologize to its customers for a 25,000-home blackout. A record heat wave had strained the electrical grid's capacity despite help from Musk.  

And so...Tesla is expanding its battery warehouse.

Tesla Big Battery electricity warehouse in a field in foreground and windmills in the background

Image source: Tesla.

50% more power

As French renewable energy company Neoen announced last week, it has contracted with Tesla to effect "a 50 per cent expansion of the world's largest battery, Hornsdale Power Reserve, also known as the Tesla Big Battery."  

In order to both address the continued blackout problem and "further showcase the complete benefits that grid-scale batteries can provide to the National Electricity Market (NEM) and Australian consumers," Neoen will have Tesla install a further 50 megawatts' (64.5 megawatt-hours) worth of Tesla Powerpacks at the power warehouse, with expansion set to be complete in the first half of 2020.

What it means for Australia

In Neoen's press release, the company notes that usage of the TBB has already saved consumers some 50 million Australian dollars. Neoen doesn't clarify whether these are savings from what would have been spent to generate electricity from hydrocarbon fuels, from decreased grid downtime, or some combination of the two.

Expanding the TBB, says Neoen, will generate additional savings for consumers and provide "additional power system reliability." The company also hopes to demonstrate that a large enough power warehouse can add a form of "inertia" to the region's power stream. Under a grid experiencing strain, the hope is that by the time the TBB is drained, other parts of the grid will already be back up and running -- preventing what could have been a blackout from actually happening.

What it means for Tesla

Such a demonstration would probably be good news for Tesla's power business as well -- and not a moment too soon. As Tesla has focused its efforts this past year on getting the kinks worked out of its Model 3 electric car production system, you see, growth at the company's much smaller energy generation and storage business (which used to be SolarCity) has sort of stalled.

Through the first nine months of 2019, S&P Global Market Intelligence data shows, sales at Tesla's flagship automotive division have surged 23% to $16.1 billion. Energy generation sales, on the other hand, have slipped 7.5% to just $1.1 billion.

Granted, expanding the TBB alone won't be enough to reverse this trend. According to Neoen's press release, the South Australian government will only be paying about AU$15 million to subsidize the expansion of TBB over the next five years. Even with a further AU$8 million in subsidies from the Australian Renewable Energy Agency, and even assuming Neoen kicks in some cash of its own, that won't drop a lot of loot to Tesla's bottom line.

AU$23 million is only about $15.6 million, after all. And the entire cost of the original TBB was reported to max out at about $50 million, implying that a 50% expansion might generate perhaps $25 million in revenue for Tesla.

But as a test case that could potentially prove the ability of a megabattery power warehouse to prevent blackouts...entirely? This project could prove invaluable to Tesla, restoring growth to its energy storage business and potentially making its batteries more attractive than ever to the green energy movement.