Rising Capacity Prices and Tight Timelines: What’s Next for South Erregulla Power Plant?
Strike Energy reports a significant 35% increase in the Benchmark Reserve Capacity Price for 2028/29, alongside strong construction progress at its South Erregulla Power Project, signalling robust prospects for WA’s energy transition.
- 35% rise in Benchmark Reserve Capacity Price to $488,500/MW for 2028/29
- South Erregulla Power Project 82% complete and on schedule for October 2026
- 15 km overhead power line fully installed
- Dry commissioning underway, electrical contractors demobilising soon
- Project expected to deliver 85 MW certified capacity supporting SWIS reliability
Benchmark Reserve Capacity Price Surge
Strike Energy Limited has announced a notable 35% increase in the Benchmark Reserve Capacity Price (BRCP) for the 2028/29 capacity year, now set at $488,500 per megawatt per annum. This jump from the previous year’s $360,700 reflects the Western Australian Economic Regulation Authority’s updated assessment of new-entrant costs and the growing value of dispatchable generation as the South West Interconnected System (SWIS) phases out coal-fired power.
The BRCP is a critical benchmark within the Wholesale Electricity Market, influencing capacity payments that underpin the financial viability of projects like South Erregulla. While actual payments depend on supply-demand dynamics, this upward revision strengthens the economic outlook for Strike’s gas-fired power plant.
Construction Milestones and Operational Readiness
Construction of the 85 MW South Erregulla Peaking Power Station is progressing well, with the project now 82% complete and procurement nearly finalised at 96%. A key infrastructure milestone has been achieved with the completion of a 15-kilometre single circuit overhead power line connecting the plant to the Western Power substation, ensuring seamless integration into the grid.
Electrical contractors are preparing to demobilise by the end of March as the power station work package nears completion. Meanwhile, dry commissioning activities have commenced, marking the transition from construction to operational testing. The upstream gas gathering system is also advancing, with first gas expected early in the second quarter of 2026.
Strategic Role in Western Australia’s Energy Transition
Once operational by the targeted date of 1 October 2026, the South Erregulla Power Plant will provide fast-start, flexible gas-fired generation. This capability is vital for supporting system reliability and facilitating the integration of renewable energy sources within Western Australia’s evolving electricity market.
Strike currently holds 85 MW of certified capacity for the 2026/27 and 2027/28 capacity years, with expected capacity payments rising from $18.4 million to $30.7 million respectively. The company anticipates maintaining this capacity allocation into 2028/29, subject to certification and market conditions.
Overall, the project’s progress and the favourable regulatory pricing environment position Strike Energy well to capitalise on the increasing demand for dispatchable power as the SWIS transitions away from coal.
Bottom Line?
With construction on track and capacity prices climbing, Strike Energy’s South Erregulla project is poised to play a pivotal role in WA’s power landscape.
Questions in the middle?
- How will the supply-demand balance in the SWIS affect actual capacity payments in 2028/29?
- What risks remain in the commissioning phase that could impact the October 2026 start date?
- Could further regulatory changes influence the long-term revenue framework for new gas-fired generation?
