James Riley
March 13, 2017

Musk offer is no way to govern

Policy

Musk offer is no way to govern

Elon Musk: With accomplice Mike Cannon-Brookes set Twitter on fire last week. No charges were laid.

You can’t fault the billionaire Australian software entrepreneur Mike Cannon-Brookes' motivation for pressing for a 100MW battery storage facility to be set up in South Australia to help it through its electricity network woes.

And you can’t blame him either for accidently setting Twitter on fire in his public discussion with Tesla founder Elon Musk.

Watching as two iconic entrepreneurs come to grips in a public forum with an intractable problem was intoxicating stuff. Lots of people wanted to get involved, to add their two-bits worth, to tweet and re-tweet and generally yell their support into the Twittersphere.

You cannot fault it. And frankly, this is exactly what we want our entrepreneurs to do.

Where they see a problem that they can help fix by applying their business networks, or political connections or their wealth and energy, you absolutely want them to have a go.

This is what entrepreneurs are good at, getting stuff done. (In fact, this is what we want from all our citizens. If you see a problem that’s within your reach and energy to fix, you should have a go.)

Mike Cannon-Brookes is one the two most successful tech entrepreneurs this country has produced (the other being his Atlassian co-founder Scott Farquhar.)

Watching Twitter and the mainstream media coverage of the MC-B/Musk exchange was amazing because we were watching stuff get done at lightning speed.

In relation to policy development by governments or policy implementation, we the punters are not used to this kind of speed.

And so we the punters became momentarily bedazzled and betwixt by these Twitter-enabled super-feats.

This preamble should make clear that this is not a criticism of two tech icons and their efforts toward solving a problem. Literally no-one wants to read that column. Why would you chuck rocks at two blokes having a crack anyway?

But there are some observations worth making. Firstly, Twitter is not the best place in the world for sober policy deliberation (although to be fair – and as MC-B found out – it is not a bad place to get the attention of the Prime Minister.)

Yes, there is something to be said for the public discussion and the likes and retweets are a good crowdsourced feedback forum.

But if you are proposing dropping taxpayer money on a project, there are mundane public sector processes developed over years that are designed to de-risk such projects from human failings.

And as an aside, I would argue that Elon Musk definitely got the better of the deal in his Twitter chat with MC-B. Musk said he would supply at a pack rate of US$250KWh – which seems about the market rate, certainly for those volumes – while MC-B has to fix the politics and the money.

Surely MC-B got the rough end of that particular pineapple. The politics and the money must be nine-tenths of the issue (although Musk saying he’d supply 100MWh in 100 days “or it’s free” certainly did focus ones’ attention!)

But I digress. Any discussion about the acquisition involving government of any new technology of this scale, there must be a concurrent discussion about the industry development policies that can be applied to that acquisition.

If we are going to decide to spend millions on new tech – whether it’s in batteries or software platforms – we should first look at opportunities to buy from Australian companies building world class products. Governments in Australia are incredible reference sales.

And here’s the thing. It turns out Australians are pretty good at this energy storage tech. We’ve got game.

So instead of doing what Australians have ALWAYS done – which is to rate overseas technology ahead of our own – we should take a moment to compose ourselves.

We should be less bedazzled by Elon Musk’s admittedly stupendous achievements, and see what options exist in our own backyard.

And then we should let our local companies bid for the work on a level playing field. Australian governments have long had a cultural cringe about buying Australian tech.

Who are those companies? Simon Hackett is one of Australia’s best known internet entrepreneurs as founder of Internode (now a part of iiNet.) Mr Hackett is now executive chairman of RedFlow Energy Storage Solutions, a company that is producing grid-scale product that is arguably better suited to the Australian conditions.

Mr Hackett, who ironically is a Tesla car aficionado, issued a statement welcoming Elon Musk’s “ambitious pitch” to build a 100MWh facility in 100 days. He noted that even for $40 billion market-cap Tesla (compared to $90 million for RedFlow) this is a significant challenge.

But the ambition for our policy-makers – in addition to providing a way to stabilise South Australian energy needs – should be to use the challenge to lever open opportunities for Australian companies, Australian employers.

Or you could look at South Australian-based Zen Energy, a company chaired by economist Ross Garnaut that has already been involved in grid-scale storage projects.

Or the Brisbane-based Redback Technologies, which builds the smart electronics and platform software that controls energy usage in hybrid battery-renewables configurations.

Redback founder Philip Livingston is a huge follower Elon Musk. He’s a role model. And when I spoke to him yesterday, he easily acknowledges that “without him, we would not even be having this conversation right now.”

RedBack does not build the battery packs. It sources them elsewhere. Instead it builds the smarts that runs the systems, and it competes very well with Tesla. The company has 52 people in Brisbane, 35 of whom are developers.

The company is hiring developers at the rate of two per week. And if the hype generated this week around Tesla – as if it were the only company capable of building such a facility – could be hitched to an Australian company? If Malcolm Turnbull were calling innovative Australian companies to discuss their relevant and expert views on technology and on Australia?

“The moment that Malcolm Turnbull made that call to me about a storage facility, the amount of [increased] capital available to me would go insane,” Mr Livingston said.

“And yes we could handle it [a project of that size] and yes it would mean that I would be hiring a lot more developers and engineers to get it done.”

The point is about culture and cultural cringe, this deeply ingrained notion we have in Australia that if it is developed in Australia or built in Australia that it is somehow a lesser option. It really is time we grew up.

Australian companies have constantly struggled with public sector buyers, for decades. Many tech companies will sell into foreign governments before the Australian Government will look at them.

Whether it’s IBM, or Oracle, or Microsoft or Google. Or Tesla. Or Salesforce or AWS. These are huge sales and marketing engines, and they are very good at it.

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