The South Australian Government will invest in a new publicly owned gas generator as part of its $550 million energy security plan.
The South Australian Government will invest in a new publicly owned gas generator as part of its $550 million energy security plan. Image Credit:Paul Sableman

The South Australian Government has today announced a $550 million package to address energy security issues within the state. The plan will provide support for the construction of new renewable energy power stations, battery storage facilities, a publicly owned gas generator, and provides the state energy minister greater control over the operation of power stations in times of emergencies.

The plan follows two significant events in the last six-months which left parts of the state, or at times the whole state, without electricity during extreme weather events.

In announcing the plan this morning, South Australian Premier Jay Weatherill cited the need to act on energy security, stating that the open energy market had failed to make the investments necessary to maintain energy security in the state.

The South Australian energy plan contains the following six parts:

1A $150 million Renewable Energy Technology Fund supporting battery storage

The South Australian Government will establish a $150 million renewable energy technology fund that will provide a mix of grant funding to support new renewable energy projects.

The fund will be split, with $75 million being provided to projects as grant funding, and the remaining $75 million being provided by way of loans to be repaid over the life of the project.

In its energy plan, the South Australian Government has already flagged that the first project to receive support under the fund will be a 100 Megawatt battery storage project.

There is speculation that such a battery storage project may be provided by US auto company Tesla, following an offer from Tesla CEO Elon Musk, made over Twitter, to provide a battery storage system of that size to South Australia within 100 days.

South Australian Energy Minister Tom Koutsantonis stated that the twitter proposal was a
“happy coincidence”.

2A New Government owned Gas power station

In a move that bucks the trend towards privatisation of electricity infrastructure, the South Australian government will build and own a new gas fired generator. The plan includes a proposal for a new power station, up to 250 Megawatts in generation capacity.

The new gas generator will be owned by the State Government, with details of its operation to be confirmed. It would represent a notable return to publicly owned generation infrastructure, following a substantial divestment from electricity assets by state governments. The Electricity Trust of South Australia, which previously held a monopoly over South Australia’s electricity supply was privatised in 1999.

When pressed about the need to build a new power station, following the recent closure of the Port Augusta coal fired power station, SA Premier Jay Weatherill stressed that the Port Augusta plant did not meet the energy security requirements for the State.

3More power to SA Government over operation of National Electricity Market

The South Australian Government has identified a gap in its ability to direct generators in their operation during periods of electricity supply shortfalls, and will legislate to provide greater powers to the State Minister for Energy.

During the fall-out from recent load shedding events in South Australia, fingers were pointed between the market operator, the Federal and State energy ministers over who held responsibility to direct power stations during market emergencies.

The State energy minister, currently Mr Tom Koutsantonis, will be granted new powers to direct power stations to operate, as well as direct the Australian Energy Market Operator to control flows through interconnectors sending electricity into South Australia, with an aim to securing and maintaining supply to homes and businesses and avoiding future load-shedding events in the future.

4The Establishment of an Energy Security Target

The South Australian Government will establish an energy security target, requiring South Australian electricity retailers to source a minimum amount of electricity generation from local power stations, and minimising the amount of electricity imported from South Australia.

It is hoped the target will also lead to the purchasing of electricity from lower emissions sources of energy, including gas, wind, solar and biomass. The state government would be seeking to limit electricity imports from Victoria, which is primarily sourced from emissions intensive brown coal generators.

As part of the plan, Premier Weatherill has flagged that the energy security target scheme will be transitioned into an Emissions Intensity Scheme, if and when one is established at a national level.

5South Australian Gas Incentives

South Australia’s energy security plan will provide incentives for the ramping up of the extraction of gas within the state. The plan claims that significantly more gas production from within the state will be required to meet increased

The move contrasts with recent moves from the Victorian Government, which has legislated a ban on the development of unconventional gas resources through fracking practises, as well as a moratorium on conventional gas resources until mid-2020.

The South Australian Government will provide $24 million in incentives for the accelerated extraction of gas in the state.

6Long term tenders for Government Electricity contracts

The South Australian government announced as part of the package that it will seek to tender 75 per cent of the Government’s own electricity consumption through a 10-year contract. Such a contract would cover the electricity consumption to government buildings, public schools and hospitals.

The government hopes that the long-term tender will enable new generators to enter the market, by providing a revenue guarantee, supporting the construction of a new privately owned generator in South Australia.

The remaining 25 per cent of the state government’s electricity consumption will be met by “dispatchable” renewable energy technologies, which would likely require the combination of renewable energy generation with storage.

Overall, the South Australian Government hopes to generate 530 new jobs in the state during the relevant construction phases of the projects supported by the plan, leading to the creation of an additional 100 full-time jobs through increased gas development activity.

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