There is renewed hope that Australia’s first large scale solar towers with storage can be built in South Australia after the government announced a new tender designed to introduce new competition in the market and remove the stranglehold of the existing gas generators.

The South Australian government will relaunch a tender for 75 per cent of its own long term electricity needs, with the specific goal of introducing a new competitor into the market.

Crescent Dunes generated its first solar electricity at night.

That has increased hope that a large scale solar tower project like that proposed by SolarReserve for Port Augusta could be built, as it appears (although not conclusively) to rule out handing a contract to an existing player, such as the mothballed Pelican Point gas generator.

The S.A. government held a tender for all of its electricity needs earlier this year, but decided only on allocating contracts for 25 per cent of its needs to smaller scale projects linking renewable energy with storage.

The new tender does not have an emissions limit, and is not technology specific, although it does say it wants to “reduce carbon emissions”. Given the cost of gas in the market, it is likely to give the opportunity for dispatchable solar plants, given that they beat gas and other thermal plants in a recent tender in Chile.

However, the state government says it will also commit $24 million towards a program to incentivise companies to extract more gas and supply it to the local market.

This though, may primarily be an attempt to reduce the cost of gas supply. In the recent electricity price spikes, the price of gas in South Australia hit $24/GJ, far more than other gas hub in Australia. That was due to supply restrictions.

Competition in the electricity market is a major concern for the state government, given the bidding patterns that helped force up the price of electricity in July. Numerous studies have suggested that the main gas generators exploited their market power and lifted their margins, adding $170-$190 million to the cost of supply.

The ACCC, the main competition regulator, said it saw no problem with that. South Australia has also been calling for a  new inter-connector, possibly through NSW, to increase competition, but this could take several years to build.

The small number of energy suppliers in South Australia have too much power – if we increase competition, we will put the power back into the hands of consumers,” Premier Jay Weatherill said in a statement.

“The current rules also let the big private electricity companies drive prices higher by withholding supply – these measures address this inadequacy. Increasing competition in the energy market is the best way to drive down power prices for South Australian households and businesses.”

Energy minister Tom Koutsantonis also said South Australians are at the mercy of a “small group of electricity generators”. He blamed the previous Liberal Government that sold the State’s electricity assets to monopolies and scrapped plans for an interconnector to NSW to maximise the profits from asset sales.

The new tender could attract interest from SolarReserve, which has a 110MW solar tower and molten storage plant operating in Nevada and wants to replicate that in Port Augusta, and Lyon Solar, which is proposing a 100MW solar PV plant with 100MWh of battery storage near Roxby Downs.

It could also attract interest from Solastor Australia, chaired by John Hewson, which has boasted that it can provide the world’s cheapest 24/7 solar power using graphite technology, but it has yet to deliver any electricity to the grid in Australia and little is known about its Chinese pilot project.

Repower Port Augusta says the tender for the power purchase is the strongest lever the Premier has to make solar thermal happen for Port Augusta.

“We had hoped this tender would be specifically for solar thermal in the Port Augusta region, but it is good news that the tender is open, keeping solar thermal on the table.“Today’s announcement keeps solar thermal with storage well and truly on the table for Port Augusta. We urge Premier Weatherill to use this tender to secure Federal funding for a large solar thermal plant with storage in Port Augusta creating badly needed jobs and on-demand clean power,” said campaigner Dan Spencer .

“Port Augusta badly needs new jobs following the closure of the coal station. This tender is the best lever the Premier has to make solar thermal happen for Port Augusta and help the community build a new future.

Any new big solar tower project will likely need support from the Australian Renewable Energy Agency, because it will be a first of its kind project in Australia. But the future of ARENA is clouded, despite it achieving a 40 per cent reduction in the costs of large scale solar PV, because both the Coalition and Labor want to strip it of funds.

South Australia also renewed its push for an “emissions intensity” scheme which it first raised at the COAG energy ministers meeting, as we reported exclusively at the time. It says the scheme will allow credits to be traded between energy companies at a national level. It intends to undertake further modelling in coming months.