The Australian Energy Market Operator has given Strike Energy’s proposed South Erregulla peaking power plant a leg up, granting it credits to contribute to the electricity grid in 2026.
The Australian Energy Market Operator has given Strike Energy’s proposed South Erregulla peaking power plant a leg up, granting it credits to contribute to the electricity grid in 2026.
Strike was awarded the full 85MW of reserve capacity credits and network access quantity by AEMO, as part of its plant to build a plant to contribute to the South West Interconnected System (SWIS).
The credits give Strike a ticket to play in the electricity market at South Erregulla, where the company revised its plans earlier this year after two wells failed to deliver as expected.
It plans to tap the existing gas in the field to fuel the plant.
The power plant will cost $48.5 million to build under a contract with Kohler subsidiary Clarke Energy, and Strike said AEMO’s published price-per-megawatt for the capacity year of $216,092/MW would net it more than $18 million worth of revenue over 12 months.
The capacity year starts on October 1, 2026.
The capacity revenue is additional to Strike’s forecast energy sales, which will be made in peak pricing periods into the wholesale electricity market within the SWIS.
Strike expects to take a final investment decision on the plant in November.
“Today’s awards confirm the need and requirement for Strike’s 85MW peaking gas power station at the northern end of the SWIS to firm the region’s vast renewable energy,” chief executive Stuart Nicholls said.
“This project marks the next leg of Strike’s gas development and decarbonisation strategy and demonstrates how Strike is using its gas endowment for a positive impact in Western Australia’s energy transition.”
Strike said the grant would mean the South Erregulla peaking plant would now be eligible for reserve capacity credits in each year of operation.
Fellow aspirant Frontier Energy, which is developing the Waroona solar project, revealed today that it did not receive reserve capacity credits from AEMO.
AEMO's capacity grant round also confirmed the end of the line for Synergy's Muja 6 coal-fired power plant, which did not receive network capacity credit allocation for the period.
A planned 100MW battery at Merredin, to be built by Nomad Energy, was also assigned credits.
Erregulla testing
Strike has also kicked off flow testing at its Erregulla Deep-1 discovery, within the EP469/L25 joint venture with Hancock Prospecting.
ED1, which is near the West Erregulla field, was found in the deepest well ever drilled onshore Australia and initiated high-pressure conventional gas flows to surface during the clean-up phase.
“Whilst positive, these initial observations are preliminary in nature and the well test outcome remains subject to the test results of the full flow test program,” Strike said.
Strike will undertake a four-week program of testing.
Non-commercial gas flows at two wells within South Erregulla earlier this year prompted a significant share price drop in Strike shares.
Strike was trading at 21c this morning, down 3.4 per cent from its opening price.
