Building a state-owned 250MW gas-fired peaking power station for operating when demand is forecast to exceed supply. Supporting the construction of battery storage as part of a $150 million new renewable technology fund. Encouraging the construction of a new privately owned power station, backed by a contract to supply government load. Establishing an exploration fund as incentive for greater gas extraction and gas-fired generation. Authorising the SA energy minister to override regulators and direct power stations to come online in times of need. Creating an energy security target that requires retailers to buy 36% of their power from sources located in SA.

It’s not perfect

This plan isn’t able to resolve any short-term issues, but it is likely enhance energy security and reliability.

A new gas-fired peaking plant will take 1-2 years to construct. This means the state’s reliability concerns will continue until at least next summer.

The introduction of battery storage could be realised before the end of 2017, but its contribution to the overall plan is minor given that its proposed scale is 100MW/100MWh.

The cost of gas-fired generation will still be a large influence on SA electricity pricing over the next 2-3 years, especially when wind generation is low and the VIC-SA inter-connector is constrained. If gas prices remain high, then the energy plan is unlikely to provide relief for high electricity prices in the short-term.

More news

Speaking of providing relief, the recent deal between Origin Energy and Engie to supply gas to the second Pelican Point plant should impact electricity price outcomes in the short-term. The 240MW plant will be supplied gas to operate for three years from 1 July 2017. It will also assist in supplying power to SA customers.

The increased frequency in the plant’s operation is expected to improve energy security and reduce the frequency and severity of extreme price events. This also has the potential to reduce risk premiums in forward electricity contracts.

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