South Australian Premier Jay Weatherill announces that SA will build Australia's largest battery to store renewable energy.
South Australian Premier Jay Weatherill announces that SA will build Australia's largest battery to store renewable energy. AAP Image/David Mariuz

Australia's biggest battery part of $550m SA power plan

TAXPAYERS will fund construction of a new emergency gas-fired power station and support the construction of the nation's largest battery in a $550 million plan to fix the energy crisis.

Premier Jay Weatherill and Treasurer Tom Koutsantonis today revealed the long-awaited scheme, which they say will also result in the construction of a new privately owned power station.

The six point plan includes:

BUILDING a State Government-owned, fast start gas-fired power station that can come on when the market does not provide enough energy to keep the lights on. It is expected to cost about $360 million. No site has yet been selected. It would be 250MW, enough to deliver close to 10 percent of SA'S peak demand.

SUPPORTING construction of Australia's biggest battery as part of a $150 million spend on a new renewable technology fund.

ENCOURAGE the construction of a new privately-owned power station using a Government bulk buy power contract.

INCENTIVISE the extraction of more gas for use in SA power stations, through a taxpayer-backed exploration fund.

GIVING the SA energy minister powers to over-ride other regulators and force power stations to fire up in times of need.

CREATING an "energy security target", which requires retailers to buy 36 percent of their power from baseload sources in SA.

"The State Government recognises the need to have our own back-up generation in place to serve the needs of the SA public," Mr Koutsantonis said.

Mr Koutsantonis stressed that the 250MW gas-fired station will not participate in the national market, rather it will be switched on when local demand is forecast to outstrip supply.

"We are not competing with AGL, Origin, and the other retailers. What we are offering is back-up generation as part of an emergency response.

Expected to cost around $350 million, the procurement process is expected to commence in the near future.

Possible sites are already being assessed.

Why SA needs a power fix

Earlier, Premier Jay Weatherill told The Advertiser the power fix would reduce bills and blackouts while also creating renewable energy jobs, but he conceded it would come at "substantial" cost.

He said it also would set up SA as a global target for new green investments.

Market experts have blamed the lack of a national carbon price for creating industry uncertainty which results in the closure of coal power plants and little new investment to replace them.

It comes as a new Grattan Institute report to be released today recommends state governments consider re-regulating power prices to stop electricity retailers from gouging customers.

"The way retailers advertise their discounts is confusing and possibly deliberately misleading," Grattan Institute researchers Tony Wood and David Blowers argue.

South Australia is heavily reliant on wind power.
South Australia is heavily reliant on wind power. Photo Contributed

They find SA could face similar problems to Victoria where consumers were paying $250 million too much each year due to high profit margins unless there is more market competition.

"Many Australians, including some of the most vulnerable, are paying more than they need to,'' the report says.

"If there is no turnaround in the market, and if the expected benefits of competition continue to remain elusive, Australian governments will need to reimpose a regulated price on the market."

The report said power companies should hand over information to regulators on their cost structures or face an Australian Competition and Consumer Commission inquiry.

Power discount offers should be easier to understand and customers should be told how much extra they will have to pay after a discount period ends, it also recommends.

Prime Minister Malcolm Turnbull said Australian households and businesses were paying too much for electricity.

"We are cleaning up Labor's mess by ensuring that electricity is affordable and reliable for households and business,'' he said.

"Our government has led the way on putting energy reliability, security and affordability as our top priority."

Federal Government experts have backed the greater use of "pumped hydro energy storage" to help meet the nation's power challenges.

SA has been struck with two major load shedding events since the statewide blackout and also has the most expensive power in the nation.

There are warnings of massive price surges in the coming year and regular rolling outages over summer without an effective fix.

News Corp Australia

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