Gas deal between ENGIE and Origin guarantees four-year supply for Pelican Point power plant
Two big energy companies have just locked in a deal to supply electricity ensure SA has power when the wind doesn’t blow and sun doesn’t shine.
SA News
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The reliability of South Australia’s electricity system has been strengthened with a four-year deal guaranteeing gas supply to the Pelican Point power station.
The deal between energy companies ENGIE and Origin to be announced on Monday will complement the continued growth of renewable energy in SA.
Pelican Point can fire up quickly to meet gaps when the wind doesn’t blow and the sun doesn’t shine.
“This agreement ensures that we can continue to make all of Pelican Point’s 497MW capacity available when it’s needed over the medium term,” ENGIE Australia chief executive Augustin Honorat said.
“Since 2017, ENGIE has invested $75 million in upgrades to a facility that was already one of the most efficient in the market.
“Gas-fired generation is an important part of our energy transition as it is a reliable complement to renewables.”
Pelican Point, across Port River from the shipbuilding precinct, has capacity almost the size of the now-demolished 520MW Northern power station at Port Augusta and helps secure the system against shocks.
Origin will supply gas to ENGIE until 2024 for its generation plant with Origin then selling the electricity to consumers.
Gas has becoming a vexed issue nationwide with political decisions leading to tight supply and rising prices.
Origin’s executive general manager energy supply and operations Greg Jarvis said the industry was “getting on with the job”.
“Pelican Point has made a major contribution to energy security in SA over the past two years, helping to keep the lights on and keeping downwards pressure on prices,” he said.
“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.
“Our current agreement with ENGIE brought this unit at Pelican Point back online when it was urgently needed to stabilise the SA market and in that time, that unit alone has met about 10 per cent of the state’s demand.”
While gas production has nearly quadrupled from 2014 to 2017, three-quarters of that is being exported.
NSW’s reluctance to allow fraccing, SA’s ban on fraccing in the South-East and Victoria’s moratorium on onshore gas and declining offshore fields has put pressure on supply.
The Federal Government has responded by imposing the Australian Domestic Gas Security Mechanism to get more control on the market.
The Australian Competition and Consumer Commission says there is sufficient gas for next year but warns the balance is “tight and can be uncertain”.
The Australian Energy Market Operator said gas-fired power generation is crucial “to provide a reliability and security role to complement variable renewable energy”.
“Therefore demand for gas from this sector is expected to stabilise in the medium term, with slight growth forecast in the longer term,” AEMO said.
