By James Regan
SYDNEY, Aug 14 (Reuters) - An Australian state leading a push for renewable energy over fossil fuels is backing a new solar thermal plant costing A$650 million ($512 million) to replace a coal-fired generator.
The 150-megawatt (MW) facility located in the city of Port Augusta is the second large-scale renewable power project planned for the state of South Australia.
In July, Tesla Inc TSLA.O was awarded a contract to install the world's biggest grid-scale lithium-ion battery in the state, in what experts say will be a litmus test for the reliability of large-scale renewable energy storage. SolarReserve will build the thermal solar plant, which will be operational in about three years. Its standard output under normal conditions will be 135 MW, with the capability of exceeding that during the evening peak demand in favourable conditions, according to SolarReseve.
SolarReserve's bid for the government tender was the lowest-cost options of the shortlisted offers, the state's premier, Jay Weatherill said during a press conference broadcast by Sky News TV, with the state to pay no more than A$78 per megawatt hour for power from the facility.
Thermal solar plants use mirrors to concentrate sunlight onto a tower that heats molten salt to generate power for up to eight hours after sunset.
Construction on the plant is scheduled to begin in 2018, according to Weatherill.
Over the past three years, South Australia has shifted from coal-fired power stations to energy from wind, solar and gas.
It has raced ahead of the rest of the country particularly in turning to wind power, which supplies 40 percent of the state's energy.
"The Port Augusta story is a stark example of the transition of the South Australian economy, with the closure of a dirty coal-fired power station, and now the commissioning of this world leading renewable energy project," Weatherill said.
While being applauded by environmentalists, critics claim the shift to renewable energy leaves the state prone to outages.
Australian Prime Minister Malcolm Turnbull, a political foe of Weatherill, on Saturday called his pursuit of renewable energy projects "ideology and idiocy in equal measure".
In September, South Australia's 1.7 million residents were without power, some of them for up to two weeks, when the grid overloaded and collapsed during a storm.
Still, South Australia managed to secure an offer for a A$110 million loan for the thermal solar project from the federal government.
($1 = 1.2673 Australian dollars)