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South Australia will work with Tesla and renewable energy provider Neoen to install the world's biggest lithium-ion battery, in a bid to curb energy concerns that have plagued the state.

The announcement was made on Friday months after Tesla founder Elon Musk made a Twitter bet in March that he could fix the state's energy problems by installing its Powerpack system with 100MW of capacity "within 100 days or it's free."

Jay Weatherill, South Australia's premier called it a "historic agreement" on Twitter.

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The grid-scale energy storage system will be deployed alongside the Hornsdale Wind Farm near Jamestown, which is operated by Neoen. The storage system will be employed to "stabilise the grid" in South Australia, which gets most of its energy from renewables.

The system will provide power for "more than 30,000 homes" according to Tesla, and Musk's bet to build it in 100 days will be honoured. Completion is set for this December.

"We actually insisted in the contract that we'd be held to the 100 days or it's free. It's what we said publicly and that's what we're going to do," Musk said during a press conference, who also thanked Atlassian's Mike Cannon-Brookes for "talking smack" with him on Twitter.

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Musk said if Tesla doesn't live up to the 100 days commitment, it could possibly cost the company "$50 million or more." But hey, at least the system will be a pretty sight.

"I think long term ... we have to make an effort to have it look good," he said. "That it will be actually a tourist destination for at least some period of time, because you'll just want to see this giant battery farm … if this was unearthed in the future [people] will think it's some sort of art exhibit."

We can't wait to see it.

UPDATE: July 7, 2017, 2:29 p.m. AEST Updates with quotes from Elon Musk.

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