High tension electricity towers are seen close to a power station on the outskirts of Melbourne, February 24, 2011. Reuters/Mick Tsikas

South Australia Premier Jay Weatherill has announced a six-point plan that would solve the state's electricity crisis. According to Weatherill, a new emergency gas-fired power station would be constructed alongside the construction of the country's largest battery. The plan would cost the taxpayers $550 million.

The premier said that the six-point plan would include building, supporting, encourage, incentivise, giving and creating. In the building aspect, a gas-fired power station would be built that would be owned by the government. The station would work when the market could not provide enough energy to keep the lights on. The station would deliver 10 percent of SA's peak demand equivalent to 250MW.

In the supporting aspect, a battery storage would be constructed. The energy would come from the wind and the sun which is a part of a new renewable energy fund supporting clean and affordable energy. The government encouraged the construction of a new private-owned power station. The construction would use a government bulk buy power contract.

SA government planned to incentivise the extraction of more gas that could be used in the power stations. It planned to replace coal from Victoria. However, it would work through a taxpayer-backed exploration fund. The giving aspect means that the SA minister would be given the powers to force power operators and override other regulators to fire up in times of need. The plan would also include the creation of an energy security target requiring retailers to buy 36 percent of their power from the state's baseload.

Treasurer Tom Koutsantonis said that the government recognised the need for the state to have its own backup generation. He pointed out that the 250MW gas-fired station would not participate in the national market. The station would be switched on when an outstrip supply would be forecasted. He said that the government was offering a backup generation as part of an emergency response and not to compete with AGL and other retailers.

Weatherill was seeking parties interested in building the battery farm. He said that theoretically there could be three separate winners to the bid or there could be one. He said that the primary criteria were technical capacity and the capability of the bidder to get it in place by summer.

Lyon Group with AES Storage, Carnegie Energy and Zen Energy have expressed their interest in bidding. Although there were bidders available, it was still unclear if legislation is still needed or the government has the power to act. The need for legislation could delay the implementation of the proposals.