Some power stuff

1. What is a peaker plant?

Wiki tells us:

Peaking power plants, also known as peaker plants, and occasionally just "peakers," are power plants that generally run only when there is a high demand, known as peak demand, for electricity. Because they supply power only occasionally, the power supplied commands a much higher price per kilowatt hour than base load power. Peak load power plants are dispatched in combination with base load power plants, which supply a dependable and consistent amount of electricity, meeting the minimum demand.

and

A peaker plant may operate many hours a day, or it may operate only a few hours per year, depending on the condition of the region's electrical grid. Because of the cost of building an efficient power plant, if a peaker plant is only going to be run for a short or highly variable time it does not make economic sense to make it as efficient as a base load power plant. In addition, the equipment and fuels used in base load plants are often unsuitable for use in peaker plants because the fluctuating conditions would severely strain the equipment. For these reasons, nuclear, geothermal, waste-to-energy, coal and biomass are rarely, if ever, operated as peaker plants.

2. What is the likely future of peaker plants?

A (thermal) energy storage company, Calmac, wants us to believe that: 

While energy storage offers a cleaner, greener way to meet power demand than peakers, the cost-effective advantages of gas-fueled plants have helped the fossil-fueled approach to stay in vogue. The longstanding cost advantages of peaker plants are slowly fading away, according to Utility Dive. In fact, the standard cost of certain types of energy storage such as batteries is expected to be competitive with high-performance combustion turbines by the end of 2018. By this period, the market is likely to experience a huge shift, caused by the disruption of the country's peak plant infrastructure with convenient energy storage solutions. Batteries are heading down to $244/kWh by 2018 and thermal storage is already competitive with peaking plants in most regions, between $150kWh and $225kWh.

 and

As the price difference between energy storage and peaker plants has eroded, the advantages of energy storage as a supplement for renewables has begun to stand out. One of the key advantages energy storage offers the power grid is response time. Energy storage technologies can deliver response times more rapid than those of peak plants. Peaking facilities require up to 20 minutes to deliver power when demand exceeds the capacity of base load plants, according to Clean Technica.

3.  A green technology website informs us:

Storage Costs Come Down Across Technologies and Applications According to Lazard Report

One should read the article to better understand this chart:


(emphasis added)

Lazard's model takes data from storage manufacturers and developers to determine the levelized** cost of storage for a particular use, and then compares that with the best available incumbent alternative. The model steers clear of systematically determining value, a most elusive quality that changes from place to place.

For instance, pumped hydro boasts a very low price per megawatt-hour, ranging from $152 to $198 in this report. That won't make it competitive, though, for a project in the middle of a flat desert, where there's no pumpable body of water to use. This report gives the cost and lets users apply that to their own use cases, and offers a few value snapshots at the end.

From elsewhere: The levelized cost of energy is defined as the constant price per unit of energy that causes the investment to just break even: earn a present discounted value equal to zero.
 
4. Does this help explain what Elon Musk is doing in Australia?

First of all, what IS Musk doing? Per the LA Times:

Musk made a bet that his company can get a grid-connected battery system {100 megawatt-hours} in South Australia installed and working within 100 days to help alleviate blackouts — and if it can't, he said, the company will do the work for free. 

How much will 100 megawatt-hours of storage help?

Here are some diesel peaking power plants in South Australia, courtesy of Wiki:

Power station	Capacity (MW)	Engines	Fuel type
Angaston	50	30	diesel
Lonsdale	20	18	diesel
Port Stanvac	65	36	diesel

So Musk's system would be like the operation of the Angaston plant for two hours.

This (PDF) on the power system tells us that the Angaston plant operates at a "capacity factor" of 0.1-0.2%; the Lonsdale at 0.4%; Port Stanvac at 0.2%.  Since there are about 8766 hours per year, a 0.1% "capacity factor" - assuming it means what I think it does - amounts to less than 9 hours per year.  So it is likely that Musk's system would be a significant addition to peaker capacity.  Since a storage system takes power when it is available in excess, and hence less valuable; and provides power when it is in demand, and hence more valuable, this system is likely to be financially viable.