By Sonali Paul

MELBOURNE (Reuters) – A fire that damaged two Tesla (NASDAQ:) Inc battery units at a huge energy storage project in Australia in July was caused by a coolant leak that went undetected during start-up tests, a state watchdog said in a report released on Tuesday.

On Tuesday, safety regulators cleared the Victoria Big Battery project run by Neoen SA. They also approved the restarting of testing at the site in Melbourne.

Energy Safe Victoria has said that the safety regulator will determine if there were any violations to the state’s electricity safety rules, and if so, whether enforcement action should be taken.

Neoen stated that it was working with Tesla in order to make sure the project’s 450-megawatt-hour energy storage is available for Australian summer which starts in December. On Wednesday, testing will be resumed.

Louis de Sambucy, Neoen Australia’s Managing Director, stated that they have spent time investigating the causes and have put in place measures to prevent it from happening again.

On July 30, smoke from one Megapack was seen coming out. Then, the fire erupted into flames that lasted several hours. The fire was finally put out of control three days later by firefighters.

A number of Victoria state agencies investigated and found that the Megapack-sized, shipping container-sized, battery unit caught fire. The short circuits were likely to have been caused by coolant leakage outside the compartment.

Short circuits developed after the Megapack was switched off following initial testing. This removed any fault protections. This meant that the fault wasn’t detected, and the fire spread quickly to other battery compartments.

Neoen stated that actions have been taken at Tesla’s Victoria location and in the global Tesla Megapack fleet to stop this from happening again.

Neoen explained that Tesla had improved its fault protection for rare events and detected them more easily through these actions.

One of the largest batteries in the world, The Victoria Big Battery can prevent blackouts on a market increasingly dependent upon solar and wind power during heatwaves.

Tesla did not comment on the incident.

Energy Safe Victoria has asked Tesla for the end of its investigation on why the Megapack was destroyed by fire and how it intends to prevent it happening again.

($1 = 1.3778 Australian dollars)