Strike Energy (ASX: $STX) announces submission for peaking gas power plant

Strike Energy Limited (Strike - ASX: STX) has submitted an application to the Australian Electricity Market Operator (AEMO) for the award of capacity credits and network access to support the development of an 85 MW peaking gas power plant at South Erregulla. The proposed power plant will be fueled by South Erregulla's newly re-certified gas reserves, with operations set to commence by October 2026. The project is expected to generate revenue of $40-$50 million per annum over the first 5 years of operations and is targeting an unconditional final investment decision in November 2024.

Executive commentary on the peaking gas power plant submission

Strike has made a submission to the Australian Energy Market Operator (AEMO) to apply for Certified Reserve Capacity (CRC) and a Network Access Quantity (NAQ) to support the development and production of up to 85 MW of electricity from a proposed fully integrated peaking gas fired power plant. The project leverages the new WA Wholesale Energy Market's (WEM) constrained operating model and capacity credit scheme, aiming to firm current and future intermittent renewable generation. The strategic development plan for South Erregulla capitalizes on the incremental value that integrated gas to power projects can generate from the spark-spread during short term power prices coinciding with lower renewable generation.

Summary of the peaking gas power plant submission and outlook

Strike Energy's submission for the peaking gas power plant, fueled by the South Erregulla gas field, marks a strategic move to capitalize on the evolving WA power market. The project aims to provide critical firming and energy support services to the SWIS, reducing the reliance on coal-fired power and increasing the reliability of renewable power. With a forecasted revenue of $40-$50 million per annum over the first 5 years of operations, the project aligns with the increasing demand for gas consumption and the transition towards renewable energy in the region. The company's unique access to interruptible gas supply and strategic land holding underscores its competitive advantage in entering the peaking power sector within Western Australia.