Strike's South Erregulla power project secures certified reserve capacity
Sydney-listed Strike Energy has secured certified reserve capacity (CRC) from the Australian Energy Market Operator (AEMO) for its proposed 85 MW peaking gas power station in the Perth basin, it announced on August 13.
The CRC assignment is a critical step in the reserve capacity mechanism (RCM), determining the maximum capacity a facility or component can provide during peak periods through a technical review.
Strike’s power project is part of the South Erregulla gas field development under production license L24 in the Perth basin. The CRC award marks a significant milestone as the project moves toward a final investment decision, expected in November 2024, after receiving the applied-for Minimum Network Access Quantity (NAQ) in October 2024, Strike said.
AEMO plans to announce the price per MW for capacity credits associated with the CRC award in September 2024. These credits are a crucial component of the project's financial model, with Strike’s independent consultants estimating a value range of A$180,000 ($118650.60) to A$230,000/MW for the 2026 capacity year. At 85 MW, this equates to annualised revenues of A$15-20mn, excluding additional revenues from energy sales or ancillary services. Strike is now required to pay a A$4.9mn deposit to secure its position in the NAQ allocation process.
Strike’s CEO, Stuart Nicholls, commented, “Securing 85 MW of capacity for the 2026 cycle is a key step in bringing South Erregulla to market. The project leverages the value that integrated gas-to-power projects can generate, particularly during peak power prices and through WA’s capacity credit mechanism.”
Nicholls added, “Our proposal to integrate the South Erregulla gas field into a dedicated peaking gas power station, which will support local renewable energy generation, demonstrates Strike’s commitment to contributing positively to Western Australia’s energy transition.”
Earlier this month, Strike signed a A$48.5mn contract with Clarke Energy to procure twenty 4.5 MW Jenbacher gas reciprocating engines for the power project.
The 85 MW peaking plant was announced by Strike last month. The facility will be fueled by South Erregulla’s gas reserves, supporting a project lifespan of over 25 years. It is expected to consume approximately 1.3 petajoules of gas per year and generate A$40-50mn/year during its first five years of operation, with operations scheduled to commence by October 2026.