Battery Revolution: Diesel Power Plants Bow Out as Energy Storage Soars

Engie to Close Two Diesel Plants in South Australia as Renewable Energy Takes Over

Engie, the French electricity giant, has announced the early closure of two diesel plants in South Australia due to the rapid transition to renewable energy in the state. The 75MW Port Lincoln plant and the 63MW Snuggery plant will be shut down by July this year, ahead of full decommissioning by 2028. Originally expected to last until 2030, the plants have become financially unviable as solar, wind, and battery storage have become more dominant in the energy market.

The closure of the Port Lincoln plant was prompted by the loss of a $9 million per year contract with state grid company ElectraNet, while changes to the federal government’s capacity incentive scheme also contributed to the decision. Engie stated that without appropriate revenue streams, the two plants are no longer profitable.

Engie ANZ CEO Rik De Buyserie acknowledged that the company had explored all possible options to keep the plants operating but concluded that closure was the most rational outcome given the accelerated pace of the energy transition. South Australia has experienced a remarkable shift from less than 1% renewables to an average of over 70% generated by wind and solar in just over 16 years.

Engie’s other thermal power plants in South Australia, including the 510MW Pelican Point gas power station, the 157MW Dry Creek gas peaking plant, and the 90MW Mintaro gas station, are expected to remain open as scheduled, although their future is not guaranteed.

South Australia aims to achieve “net” 100% renewables within four years, according to transmission company ElectraNet. The state’s growing grid-scale battery storage fleet, along with wind power and large-scale solar, is filling the gaps in supply and grid services that were previously met by diesel and gas peaker plants. Gas plants, such as AGL Energy’s Torrens Island B combined cycle gas plant, are facing increasing competition from batteries as larger and longer duration storage facilities are planned and come online.

AGL Energy COO Markus Brokhof has acknowledged that the company is cannibalizing its own business by investing in batteries, but believes it is necessary to stay competitive. EnergyAustralia is also joining the battery trend, with plans to build a four-hour battery in South Australia by 2026. Other battery projects in the state include a 220MWh battery proposed by Epic Energy and a 240MW battery planned by Copenhagen Infrastructure Partners.

The closure of Engie’s diesel plants highlights the need for reliable and investment-friendly renewable energy policies. The South Australia Labor government is expediting approvals for several grid-scale batteries and working on a Renewable Energy Transformation Agreement with the Commonwealth to ensure reliability and attract more investment in renewables.

The closure of the two diesel peakers will not result in any job losses, according to Engie.