SA backs battery, gas plant under $550m energy plan

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20150409: Canberra; AFR: South n Treasurer Tom Koutsantonis. Photo by Sean Davey.20150409_AFR_0310.jpg Photo: Sean DaveySouth has outlined a series of policy measures that are aimed at insulating the state from the recent spate of damaging blackouts as it seeks more secure electricity supplies – sparking immediate criticism that by effectively going it alone, the state could create additional problems for the national energy market.
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A government-owned gas power plant forms the cornerstone of the $550 million plan, which also features a large battery storage project, a second gas power station to be built by the private sector backed by a contract to supply the state government and other measures to encourage the development of additional gas resources and an energy security target for the state.

“We’re taking charge of our energy future,” Premier Jay Weatherill??? said of the series of measures outlined on Tuesday, which include giving additional ministerial powers to direct the market to operate in the interests of South ns.

He also promised that the steps would help to reduce power prices, although this would likely occur once all of the measures were in place.

But the decision to build a $360 million government-owned power plant, to be financed out of the budget surplus without canvassing cheaper alternatives, sparked immediate criticism along with concerns that giving the state energy minister the power to intervene in the national energy market to protect South n interests could prompt other states to do likewise.

“We’re calling for a national solution,” Anthony Penny of Business SA said. “We can’t afford for South to be islanded.

“There is no point in South intervening in a national market and then expecting that national market to work in our favour when it suits us. This will only cause other States to follow a similar isolationist pathway.”

“Governments do have to take leadership decisions,” Neil Greet of Engineers said, “but it has to be done as part of a national transition plan. This needs to be part of an integrated plan that takes us forward.”

Mr Weatherill conceded the proposed new power plant would not be in place by next summer, and that supply pressures could emerge well before then anyway, which could force the government to contract for additional supplies well before year end. As well, the source of gas for this plant has yet to be clarified.

Obtaining sufficient gas supplies at a competitive price has been a stumbling block for private power generators serving the state.

Mr Weatherill said the government is finalising a contract to supply three-quarters of the government’s electricity use from a new supplier to the market, which will build a new power plant. A shortlist of three companies has been compiled, with the final decision due soon.

The various measures outlined should also serve to reduce power prices in the state, he said, without being specific.

“We have expert advice this will reduce the price of electricity, when competitive pressures are returned to the market, which this plan endeavours to achieve,” he said. Battery plant

The battery storage plant is planned to have 100 megawatt capacity, which would make it the largest in . Built and operated by the private sector, the cost has yet to be clarified. A number of groups are vying to win this contract.

Details of the state’s energy policy have emerged just days after Tesla boss Elon Musk offered to save the state from blackouts by installing large-scale battery storage.

“This is a plan that puts control of our energy system back in South n hands,” Energy Minister Tom Koutsantonis said on Tuesday.

“For too long, South n households and businesses have been at the mercy of private companies seeking to maximise their profits and a national operator that manages our grid from Melbourne and Sydney.”

The new policy comes after a statewide blackout last September when freak storms brought down major transmission lines in the state’s north, with further widespread disruptions in early February when local power generators refused to supply to help avert further blackouts.

On one occasion about 90,000 properties were intentionally blacked out when the n Energy Market Operator (AEMO) ordered load shedding to deal with a lack of adequate supply. On other occasions it has warned of possible supply cuts as demand soared.

Mr Weatherill said the government’s plan would also put downward pressure on electricity prices.

“We’ll get reliable, affordable and clean power and ensure more of the state’s power is sourced, generated and controlled here in South ,” he said. “Our state has built its reputation on a clean, green environment and this plan recognises that clean energy is our future.”

He indicated that the government-owned power plant may not operate at a profit as it will provide some ancillary services to the power market, although by operating it at times of high power prices this could generate income in those periods. ‘Considered and comprehensive’

The n Services Union’s SA and NT branch said the plan would bring an end to the employment insecurity its members in the energy sector had been feeling.

“The government has offered pathways for cleaner technologies to develop, while giving security to workers in gas-fired generation until that pathway is clearer,” branch secretary Joseph Scales said.

AGL Energy, one of the largest power generators in South ,described the new policy as “considered and comprehensive”.

“Increased gas supply is a key way of improving energy competitiveness for South n businesses and households,” it said.

“While national reform of the energy market architecture is urgently required, these South n reforms will address some key issues required for the more cost-effective integration of increasing renewable energy generation.”

with AAP and Reuters