Battery storage for renewable energy, two new gas-fired power plants and tougher legislation to intervene in the national electricity market headline South Australia's $550 million strategy to solve its energy crisis.
The plan will be funded by dipping into the state's projected budget surpluses and includes a $150 million fund to encourage new renewable energy investment.
Premier Jay Weatherill says the strategy will ensure the state's energy security, put downward pressure on electricity prices and create about 600 new jobs.
But the federal government says it will actually drive up prices and may fall foul of National Electricity Market rules.
Under current arrangements, states can only intervene in the market and direct generators to turn on after declaring a state of emergency.
"What SA is today saying is that they won't meet that threshold," federal Energy Minister Josh Frydenberg told reporters in Canberra.
"They are talking about a much lower threshold to intervene. Arguably, that may be in contravention with the National Electricity Market rules and therefore, that is something that we will take advice on."
Business SA also questioned any proposed intervention in the operation of the market, saying it could prompt other states to follow a "similar isolationist pathway".
But Mr Weatherill defended the plan, saying it was about delivering South Australian power to South Australian consumers.
"South Australians have been let down by a broken national energy market that puts profits before people," he said.
"We're going to put people first."
Reaction to the plan has been mixed with power generator AGL calling it a "considered and comprehensive approach" to challenges in the market.
Environmental and renewable energy groups decried the continued commitment to gas but welcomed the increased funding for renewable energy.
Mr Frydenberg, however, said it was a "$550 million admission of failure" by the Weatherill government.
"In fact, the measures announced today will only increase electricity prices for South Australians. It has the potential to increase prices for Victorians, for people in New South Wales and in Tasmania," he said.
SA Opposition Leader Steven Marshall said the plan was little more than a $550 million electricity tax and was the result of the government's decision to allow the state's last coal-fired power station at Port Augusta to close.
Under its strategy, the government will spend $360 million to build its own 250 megawatt gas-fired power plant which will only be used in emergencies and will also use its bulk electricity buying power to encourage the development of another, privately-owned gas-fired plant.
Gas supplies would be enhanced by an extra $24 million in government incentives to develop new reserves with landowners to benefit from a 10 per cent royalty on any gas extracted.
In addition the government will provide grants and low-interest loans to develop Australia's largest battery to store up to 100 megawatts of wind and solar power to be dispatched into the market when needed.
The renewable energy fund will also be used to help develop other alternative energy projects such as solar-thermal plants, hydrogen energy systems and pumped-hydro.
The government's action comes after a statewide blackout last September when freak storms brought down major transmission lines in the state's north and the load shedding of 90,000 properties during heatwave conditions in February.
