Tesla will get the system installed and working 100 days from contract signature or it is free.
Musk, who is in Australia today for the announcement, updated the 100-day claim by saying that it would start once an electricity grid interconnection agreement has been signed with the local utility.
South Australian company CPP will be involved in the build, and Musk joined with South Australia's Premier Jay Weatherill saying that the project would create jobs for the southern state.
In September previous year the state was plunged into a blackout after a severe storm interrupted power supply. The South Australian government has been seeking to fix the problem with renewable energy. It will be linked up to French renewable energy company Neoen's Hornsdale Wind Farm near Jamestown, South Australia.
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This after 10,000 people marched earlier in the day, protesting the gathering that brings together the world's leaders. Xi is expected to attend the 12th G20 summit in Hamburg , scheduled for Friday and Saturday.
The battery will have a capacity of 100 megawatts, three times bigger than the world's largest battery at the moment.
The massive battery - the largest lithium-ion storage project in the world - is created to power 30,000 homes in the blackout-plagued region. In the end the state government chose to ignore the feds and pursue their own energy security policy, which included building a huge amount of battery storage.
The embrace of battery technology is part of the state government's AUD550 million energy security plan.
The billionaire magnate took to Twitter to announce that "this will be the highest power battery system in the world by a factor of 3".
It also supports another commitment Musk has made - to bring clean energy to the world through battery storage, renewable energy, and electrified mobility. Tesla will be responsible for the entire energy storage system component of the project.
If they fail, Musk has promised that the battery will be offered for free.
Tesla expects the system to come online in December.
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