The Commonwealth and South Australian governments have signed a $1.08 billion energy deal which will see the development of gas hubs in SA and boost the flow of electricity across the border to NSW.

The focus of the MoU is on boosting gas supply and emission reduction projects, as well as providing money for he proposed electricity transmission line between SA and NSW.

It will also supply up to $110 million in Commonwealth concessional finance for solar thermal and other storage projects in South Australia.

 The Commonwealth will contribute $660 million and South Australia will provide $422 million as part of the agreement.

The deal includes a target of an additional 50 petajoules of gas per year by the end of 2023 and 80 petajoules per year by 2030, and $400 million in Commonwealth funding for investment in carbon capture and storage, electric vehicles, hydrogen and other emissions reduction projects.

It also provides for up to $100 million in joint support for Project EnergyConnect through joint underwriting of key early works on a 50/50 basis.

Getting more gas into the market

Prime Minister Scott Morrison says the bilateral agreement reflects the government’s commitment to combating climate change.

“This means getting more gas into the market to support the increase in renewable solar and wind power coming into the electricity system,” he said in a statement.

The bilateral agreement would also support the next wave of energy technology, the PM said.

South Australia Premier Steven Marshall said the deal would boost the SA-NSW Interconnector and co-ordinate efforts to deliver a hydrogen export industry in the state.

The joint commitment to develop hydrogen hubs in South Australia is a strong sign to our global partners in Asia and Europe that South Australia can lead the nation in this new industry.

SA energy minister Dan van Holst Pellekaan

It would also help deliver the infrastructure for electric cars, he said.

Benefits of the deal would also flow back to the National Electricity Market, energy and emissions reductions minister Angus Taylor said.

South Australia is aiming to achieve 100 per cent renewables by 2030, and becoming an exporter of renewables and gas.

“The joint commitment to develop hydrogen hubs in South Australia is a strong sign to our global partners in Asia and Europe that South Australia can lead the nation in this new industry,” the state’s energy minister Dan van Holst Pellekaan said.

He said achieving better and lower cost gas production in the Cooper and Otway Basins will be a key focus.

The federal government is developing a series of bilateral energy and emissions agreements with state and territory governments and has already signed deals with Tasmania, NSW and Victoria.