* State to build new gas-fired plant, battery farm
* Tesla to vie with locals to supply batteries
* Federal government warns plan may drive up power prices
(Adds Tesla, BHP Billiton, government comments)
By Sonali Paul
SYDNEY, March 14 South Australia, the country's
most renewable-energy dependent state, outlined plans on Tuesday
to spend A$510 million ($385 million) to keep the lights on,
just four days after Tesla Inc boss Elon Musk offered
to save the state from blackouts by installing large-scale
The plan includes A$150 million to encourage the development
of a 100 megawatts of battery storage, possibly from Musk or
from local providers. The state will also build and operate a
new A$360 million 250-megawatt gas power plant to stabilise its
The South Australia government came up with the emergency
plan after a state-wide blackout last September during a storm
left homes and businesses in the dark for up to eight hours and
paralysed some industries for up to two weeks.
"Today, South Australia takes hold of its energy future. We
have a national electricity market which is failing not only
South Australia but failing the nation," state Premier Jay
Weatherill said in a statement.
The state, which relies on wind for about a third of its
power capacity, has become vulnerable to outages and soaring
prices as it does not have enough back-up power when the wind is
South Australia's last coal-fired power station shut down
last May, as it was making losses, and France's Engie SA
mothballed one of two units at a gas-fired power
plant for the same reason.
On the batteries front, Weatherill said he was speaking to a
range of providers.
"We want as much local content as possible," he told a news
conference. "We also need to put in the balance the reputational
effect of attracting an international player of the size of Elon
Musk to South Australia. "
Weatherill spoke to Musk on Saturday after Australian tech
entrepreneur Mike Cannon-Brookes said he would help raise
funding and political support for the Tesla chief's offer to
supply 100 megawatt-hours of batteries for $25 million within
100 days of signing a contract, or provide it free.
"Over the coming days Tesla are assessing with stakeholders
how best to deliver on this exciting opportunity for the benefit
of the Australian energy market," a Tesla spokesman said.
South Australia released its plan a day ahead of a crisis
meeting called by Prime Minister Malcolm Turnbull with the heads
of Australia's gas producers to find ways to boost gas supply,
crucial for power plants and manufacturers.
Federal Energy Minister Josh Frydenberg slammed South
Australia's plan saying it could drive up power prices and
undermine national electricity market rules.
Top global miner BHP Billiton, which lost
$105 million at its Olympic Dam copper mine after the blackout
last September, welcomed the state's effort to boost energy
security, but warned it could have "pricing implications" and
affect expansion plans.
"South Australian business and residents cannot afford a
repeat of the energy issues experienced over the past eight
months, and we look forward to immediate steps being taken which
will provide greater energy security for the State before the
end of the year," a BHP Billiton spokesman said.
($1 = 1.3231 Australian dollars)
(Additional reporting by Wayne Cole; Editing by Richard Pullin
and Christian Schmollinger)