This study analyses the potential of Smart Power Generation (SPG) power plants within a large utility portfolio in South Australia, operating in the National Electricity Market (NEM). A state-of-the-art modelling framework shows that an SPG peaking power plant can provide a significant gross margin to the utility, compared to open cycle gas turbine (OCGT) alternatives. At the same time, SPG decreases the risk exposure of the utility by reducing the volatility of annual returns. The benefits are based on the inherent operational flexibility of the internal combustion engine (ICE) technology, especially the capability to reach full load in less than 5 minutes. Such agile operation enables a superior position in the 5-minute market, compared to slower peaking plant technologies. 

The objective of the study is to quantify the value of SPG as part of the utility’s portfolio. However, the study results also show interesting system level benefits. With 200 MW of SPG capacity as a part of the portfolio, the average wholesale electricity price in the NEM is reduced by 4% compared to the heavy duty OCGT case, with market prices of 41.3 AUD/MWh and 42.9 AUD/MWh, respectively. The price drop is a result of the SPG plant being used to prevent disadvantageous price spikes for the utility.

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  M Rajagopalan

   Market Development Director Asia & Middle East
   Wärtsilä Energy Solutions
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