South Australia’s premier Jay Wetherhill has announced plans to build a 250 MW gas-fired power plant as the state looks to improve its energy security.
The state is Australia’s most renewable energy-oriented region and recently its energy policy came under the spotlight after a blackout left homes and industries without power for weeks. It has prompted clean energy tycoon Elon Musk to get involved in offering his company, Tesla's storage battery as a solution.
Reliant on wind for about a third of its power capacity, the state has become vulnerable to outages and soaring prices as it does not have enough back-up power when the wind is not blowing.
They are now set to spend around A$510m ($385m) keep the lights on, just four days after Tesla Inc boss Elon Musk offered to save the state from blackouts by installing large-scale battery storage.
That plan includes A$150m to encourage the development of 100 MW of battery storage, possibly from Musk or from local providers.
"Today, South Australia takes hold of its energy future. We have a national electricity market which is failing not only South Australia but failing the nation," Weatherill said in a statement.
South Australia's last coal-fired power station shut down last May, as it was making losses, and France's Engie SA mothballed one of two units at a gas-fired power plant for the same reason.
On the batteries front, Weatherill said he was speaking to a range of providers.
"We want as much local content as possible," he told a news conference. "We also need to put in the balance the reputational effect of attracting an international player of the size of Elon Musk to South Australia. "
Tesla chief Musk has offered to supply 100 megawatt-hours of batteries for $25 million within 100 days of signing a contract, or provide it free.
"Over the coming days Tesla are assessing with stakeholders how best to deliver on this exciting opportunity for the benefit of the Australian energy market," a Tesla spokesman said.
Australia is the latest country to consider battery storage as a solution to the challenge of providing reliable power supplies as grids become more dependent on renewable energy and phase out more polluting — but more stable — coal and gas