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The South Australian Government has announced that it has signed two lease agreements for the state’s nine generating units, collectively worth $219 million.

Nexif Energy and Infigen Energy signed the leasing agreement for the units which are currently located at Elizabeth and Lonsdale.

Minister for Energy and Mining, Dan van Holst Pellekaan, said the leasing agreement will result in taxpayers recouping around $227 million in costs.

“This is also great news for South Australian electricity consumers who will receive the benefits of lower prices through extra competition, in addition to retaining the existing backup generation capacity they currently provide,” Mr van Holst Pellekaan said.

Nexif Energy and Infigen Energy have both signed 25-year lease agreements to operate the state’s nine backup generating units currently located at Elizabeth and Lonsdale, with the State Government retaining ownership of all nine generators.

The four generating units located at Lonsdale will be leased to Infigen Energy from May 2020 and operated commercially for one to two years at the existing site, before being relocated to SA Water-owned land at the Bolivar Wastewater Treatment Plant.

Infigen Energy intends to use the 123MW of output from the generators in conjunction with the 278.5MW Lake Bonney Wind Farm and a 25MW/52MWh battery.

The five generating units located at Elizabeth will be leased to Nexif Energy from May 2020, before being moved to Outer Harbour.

Nexif Energy intends to pair the 154MW of output from the generators with its 212MW Lincoln Gap Wind Farm and 10MW battery.

Both Infigen Energy and Nexif Energy will connect the generators to natural gas at the relocation sites via the Moomba to Adelaide pipeline or SEA Gas pipeline.

Reduced fuel costs from running the generators on natural gas instead of diesel will help Infigen Energy and Nexif Energy bid the generators into the market at a lower price.

Reduced emissions from running the generators on natural gas instead of diesel will also be a significant improvement.

Nexif Energy Founder and Co-CEO, Matthew Bartley, said the company looks forward to working with the State Government to help secure South Australia’s long-term power supply under this new agreement.

“Nexif Energy already has a strong presence in South Australia thanks to our $500 million investment in the Lincoln Gap Wind Farm, near Port Augusta, and we’re pleased to be able to add to our investment with the development of the new gas-fired power station utilising the five leased generators,” Mr Bartley said.

The Lincoln Gap Wind Farm has a construction workforce of between 110 and 140 workers, while approximately 70 workers will be required to support the five generating unit’s move to Outer Harbour. Nexif Energy also recently opened an Adelaide office in the CBD, further highlighting its commitment to South Australia.

Mr van Holst Pellekaan said the generators will remain in South Australia and will be available for emergency use during the summer when they are most likely to be needed. This arrangement is expected to save the South Australian Government approximately $1 million per month it would have spent maintaining the unused generators in readiness.

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