South Australia’s surging electricity prices prompt new plan

Snowy Hydro takes ownership of Colongra Power Station

The surging cost of electricity for industrial customers in South Australia has triggered plans for a new gas-fired power station between Leigh Creek Energy and Shanghai Electric, The Sydney Morning Herald reports.

Leigh Creek managing director David Shearwood told the newspaper Leigh Creek has altered the shape of its integrated energy project planned at the Leigh Creek coal deposit 550 kilometres north of Adelaide. This is to assist industrial customers facing huge increases in power costs due to the closure of Alinta’s power stations at Port Augusta.

The plant would have a capacity of 300 megawatts to 600 megawatts, costing $450-$900 million. Start-up is targeted for early 2019 with all power to be sold under long-term contracts.

The business strategy is based on the controversial process of in-situ gasification. Some of the gas would be used in the plant for fertiliser production, and the rest is to be supplied to east coast markets.

The agreement between Leigh Creek and Shanghai Electric stipulates they will jointly construct, own and run the gas-fired generator with the equity split between the partners. Funding and electricity sales are yet to be determined.

Leigh Creek was formed last year through a back-door listing according to the Sydney Morning Herald, and is approximately 7.5 per cent owned by China’s CITIC.

Executive chairman of Leigh Creek Justyn Peters said the deal was a great first step for the company and an important move for South Australia.

Mr Shearwood told the Sydney Morning Herald the total cost of the project could approach $2 billion.