Strike Energy Ltd (ASX:STX) has seen a boost to its proposed South Erregulla peaking gas power station, being awarded 85 MW (megawatts) of Certified Reserve Capacity (CRC) within WA’s electricity grid, the South West Interconnected System, for capacity year 2026.
The provision – awarded by the Australian Energy Market Operator (AEMO) – will ensure a significant de-risking of the project as Strike pushes it closer to a final investment decision, which is anticipated in November 2024.
Ahead of the latter decision, the AEMO will publish the price per MW for capacity credits related to the CRC award, with this data playing an important role in quantifying project economics for South Erregulla.
Independent consultants hired by Strike have modelled a range of $180-230k per MW for the 2026 capacity year.
Managing Director and CEO Stuart Nicholls said the decision was another important step in progressing the project.
“Being awarded the 85 MW of capacity for the 2026 cycle paves the way for South Erregulla’s path to market,” he said.
“The project capitalises on the incremental value that integrated gas to power projects can generate from the spark-spread during peak power prices and WA’s capacity credit
mechanism.
“Upon receiving confirmation of our minimum network access quantity, we look forward to taking a Final Investment Decision.
“Strike’s proposal to integrate the South Erregulla gas field into a dedicated peaking gas power station to firm local renewable power generation, is a clear demonstration of how Strike is using its gas endowment for a positive impact in Western Australia’s energy transition.”
Strike has been trading at 17 cents.