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Origin extends contract for South Australian power generator

Origin Energy has renewed a contract with Engie Australia that will extend the operation of a South Australian gas plant by another four years in a move that should reduce risks to security of supply in the state that is increasingly dependent on renewable energy.

The deal lengthens a three-year agreement struck between the two in 2017 that enabled the restart of the second turbine at the French firm’s Pelican Point gas peaking plant near Adelaide.

It covers 250 megawatts of capacity at the Pelican Point generator, extending its operation until at least the end of June 2024.

“Pelican Point is one of the most efficient gas plants in the National Electricity Market and has made a major contribution to energy security in South Australia over the past two years, helping to keep the lights on and keeping downwards pressure on prices,” said Origin’s executive general manager energy supply and operations Greg Jarvis.

“With a lot of solar and wind coming online over the next few years, Pelican Point will play a key role in firming the rapid growth of renewables, particularly during the evening peaks when the most stress is placed on the system.”

Mr Jarvis said the generating unit had met about one-tenth of South Australia’s power demand since the 2017 deal, which brought it back online when it was urgently needed to stabilise the state’s power market.

The extension of operations at the unit comes amid nervousness around security of supply in the National Electricity Market over the next several summers in the absence of new investment in fast-start power stations that could fill in the gaps between wind and solar generation. AGL Energy is separately seeking to delay the mothballing of two of the four units at its Torrens A gas power station in South Australia until September 2020 to help compensate for an outage at its Loy Yang A coal power generator in Victoria.

Origin’s arrangement with Engie, which starts on July 1, 2020, involves Origin supplying gas to the Pelican Point plant, and also accessing the 240 MW of electricity production.

Origin said it would continue to pay charges and supply gas to Engie “in order to support electricity generation at Pelican Point, for the benefit of customers in South Australia”.

Source: Financial Review