* Battery to provide emergency power to blackout-prone state
* A litmus test for reliability of large-scale renewable energy
* Musk has promised delivery within 100 days or it will be free
* Battery can light up 30,000 homes if there is a blackout (Adds comments from battery industry executive and analyst)
By Colin Packham and James Regan
SYDNEY, July 7 (Reuters) - Tesla Inc TSLA.O has won an Australian contract to install the world's biggest grid-scale battery in what experts say will be a litmus test for the reliability of large-scale renewable energy.
Tesla CEO Elon Musk, known for his bold approach to cars, clean energy and space exploration, trumped dozens of competing proposals to build the gigantic lithium-ion battery that will serve as emergency back-up power for South Australia - a state racked by outages.
But under the agreement, Tesla must deliver the 100-MW battery within 100 days of the contract being signed or it will be free - a commitment Musk made in a Tweet in March.
"There will be a lot of people that will look at this -'Did they get it done within 100 days? Did it work?'" Musk told reporters in South Australia's capital city of Adelaide.
"We are going to make sure it does."
The project likely involves linking hundreds of smaller battery modules and is "very doable," although the 100-day deadline might be tight, Sankar Das Gupta, chief executive of Canadian lithium-ion battery supplier Electrovaya, told Reuters.
The battery, designed to light up 30,000 homes if there is a blackout, will be built on a wind farm operated by France's Neoen, parts of which are still under construction.
Musk said failing to deliver the project in time would cost his company "$50 million or more" without elaborating.
It will be the largest lithium-ion battery storage project in the world, overtaking an 80 megawatt-hour facility in California that also was built using Tesla batteries.
Over the past three years, South Australia has decided to shut down its coal-fired power stations and instead rely on wind, solar and gas. It has raced ahead of the rest of the country in turning to wind power, which supplies 40 percent of its energy.
The move has been applauded by environmentalists but left the state prone to outages as there is no way to store enough energy when the wind does not blow. In September, South Australia's 1.7 million residents were without power, some of them for up to two weeks, when the grid overloaded and collapsed.
The battery is aimed at getting around the problem of inadequate storage.
"Cost-effective storage of electrical energy is the only problem holding us back from getting all of our power from wind and solar," said Ian Lowe a professor of science at Australia's Griffith University.
"This project is a significant innovation to demonstrate the feasibility of large-scale storage."
LITHIUM AMBITIONS
Dozens of companies from 10 countries, including privately owned Lyon Group, working with U.S. power company AES Corp AES.N , expressed interest in the project. the sector is waiting to see if Musk can make good on his promise.
"It seems that confidence helped Tesla win but typically this kind of project takes six months so we have to wait and see whether or not Tesla can do it," said a source at a Korean competitor to Tesla, declining to be identified due to the sensitivity of the matter.
Late last year, Tesla took about three months to provide a 20-megawatt energy storage system to a substation owned by Southern California Edison Co, the California utility said.
"The Tesla technology is very mature. It's very well understood," said Haresh Kamath, a battery researcher at the Electric Power Research Institute in California. "It's not a moonshot."
Lithium-ion batteries have been in widespread use since about 1991, but mostly on a small scale, such as in laptops and cell phones.
For their proponents who have long been pushing for grander use, the success of Musk' s big South Australian experiment will be key to greater acceptance.
"For lithium technology to take off on a global scale, they clearly need the storage capacity to make sure renewables can deliver 24 hours a day, seven days a week," said Adrian Griffin, a geologist who specialises in lithium extraction.