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Origin Energy and the French multinational electric utility company Engie have struck a deal worth $40 million to upgrade South Australia’s Pelican Point Power Station.
The agreement will return the station to its full power (479 mW) by July 1, reducing the risk of blackouts across the state when energy is in peak demand next summer.
“We will be able to offer an additional 240mW of energy to the South Australian market, while also creating short-term economic activity through the turbine refurbishment program,” Engie CEO Alex Keisser said.
“Recent events have highlighted the challenges of the National Electricity Market (NEM) in SA and by customers contracting Pelican Point’s additional capacity, some of the supply pressures experienced in times of high demand could be alleviated.”
Engie is understood to have already “signed electricity supply contracts with major industrial players”, according to a report in the AFR.
The package means the station, which lost more than $17 million in 2015, will be able to supply around a quarter of the state’s power needs.
Origin CEO Frank Calabria said the agreements were “examples of immediate steps industry is taking to safeguard electricity supply” while South Australian energy minister Tom Koutsantonis said it is “a symbol of the future compared with the past”.
“Critically, it makes sure that we have more generation on the South Australian side of the border, less reliance on coal-fired generation coming from Victoria and importantly making sure we have the security we need during periods of peak demand during the summer period,” South Australian Premier Jay Weatherill added.