ONE of the world’s biggest companies Chinapower state -owned is planning to build a major gas-fired power station in the state’s north, which has the potential to ease South Australia’s electricity supply crisis.
The Advertiser has been told Powerchina wants a 250-megawatt generator, costing about $350 million, to be operating in South Australia by mid-2018.
If it proceeds, the Powerchina station would have baseload power generation capacity equivalent to Pelican Point’s gas-fired station and about half that of Port Augusta’s Northern Power Station, which closed last May.
This would bolster baseload supply, making the state less reliant on intermittent renewable generation and would likely reduce the chances of another statewide blackout.
In a statement to The Advertiser, Powerchina said it had been identifying potential locations across SA for gas-fired and clean energy power generation, in a joint effort with Adelaide-based Sino Australia Clean Energy Company.
The mothballed Port Augusta Power Station before the stack was brought down.
“The group (is) responding to South Australia’s obvious requirement for certainty in the supply of power for both domestic and commercial uses to underpin economic development and employment creation in the state,” the company said.
Powerchina, a state-owned enterprise ranked by Fortune as the world’s 200th biggest company, says it is assessing sites for a gas-fired, solar and wind power baseload power station.
However, The Advertiser has been told the company is focusing on a gas-fired plant near Port Augusta, to capitalise on supply issues for major firms like Whyalla’s Arrium steelworks and BHP’s Olympic Dam mine.
SA Power Networks, which operates the state’s electricity distribution network, confirmed that Powerchina had approached it a few months ago for a “general conversation”, while high-voltage network operator ElectraNet cited commercial confidentiality and declined to comment.
State Energy Minister Tom Koutsantonis said the Government had not been approached but, if the proposal was genuine, it would encourage a development application because more gas-fired generation would be good for the state.
Some industry insiders scoffed at the proposal, questioning its viability when Pelican Point cannot operate profitably at full capacity amid tight gas supplies.
The gas-fired, 479MW Pelican Point station, near Outer Harbor, was mothballed in mid-2014. However, 240MW was brought online, underpinned by a supply deal with BHP, after some of the state’s biggest employers came close to costly shutdowns in July because of skyrocketing electricity prices.
Pelican Point is not operating at full capacity because of cost pressures from cheaper solar and wind generators and gas supply issues.
Mr Koutsantonis said government representatives had met with Powerchina previously but had not discussed this project.
“Additional gas-fired generation would be good for SA, which is why the State Government is partnering with gas companies through $24 million in grants to extract more gas and offer it to local generators first,” he said.
“We are also using the procurement of 75 per cent of the State Government electricity load to incentivise the entry of new generation into the SA market.”
Powerchina’s Australian partner is fronted by Adelaide entrepreneur Malcolm Peters, a family friend and business associate of Chinese mining mogul Sally Zou, whose daughter Gloria — a Chinese film and TV star — has been attending school in Adelaide.
A bid for New South Wales electricity distributor Ausgrid by Chinese government-owned State Grid Corporate and Hong Kong-listed Cheung Kong Infrastructure (CKI) was blocked in August by federal Treasurer Scott Morrison, who cited national interest concerns.
CKI and an associated company own 51 per cent of SA Power Networks, while State Grid owns 46.5 per cent of ElectraNet.
The Australian Energy Council, which represents 21 major energy businesses, consistently warned of more blackouts and higher power prices after the Port Augusta power station’s closure.
In an electricity supply briefing issued this month, the Energy Council says the Australian Energy Market Operator had advised there was sufficient generation to meet maximum demand in SA, despite the Port Augusta closure and the March shutdown of Victoria’s Hazelwood plant.
“The closure of these power stations has increased the cost of wholesale electricity, as there is reduced supply to meet the same demand,” the briefing states.
“This has flowed through to higher power prices in South Australia and Victoria.”