The new partners say they will work together on the project, initially setting up a joint venture company.

“We are very pleased to have developed our relationship to the point where we have now agreed to sign a HoA,” LCE executive chairman Justyn Peters said.

“The generation of base load power through a gas fired power station is important both to our company and to South Australia. We see this as a great first step in our development as an energy company,” he said.

“The building, owning and operating of a power station ensures the success of our project, but also has the ability to provide cheaper, reliable power to industry and mines in South Australia.”

SA has been undergoing considerable pain over recent months, as it makes a shift to embrace renewable generation, with the closure of a number of aging coal-fired power stations underway.

The SA network is also extremely vulnerable to supply disruptions from the east coast.

In November power was cut to more than 45,000 properties across South Australia after the failure of an interconnector linking SA to Victoria while the other interconnector was undergoing maintenance – and the SA grid could not meet summer demand.

SA energy minister Tom Koutsantonis has previously opened the door to new gas-fired power, with GDF Suez into the bidding for a new $50 million peaking power contract based around its Pelican Point power station.

GDF developed Pelican Point with Mitsui (27%), on the Port River, 20km north-west of the Adelaide central business district in 1999 and the firm claims it is one of Australia’s most advanced, efficient and environmentally friendly power stations.

The power station uses a combined-cycle gas turbine operation to produce 479MW of electricity, around 25% of South Australia’s needs, however it is now running at just 230MW.

The plant’s operations were scaled back in 2014 when the owners complained they could not compete with subsidised alternative energy.

SA receives some 40% of its power from wind (30%) and solar (10%), albeit with backup from coal-fired generation in Victoria and New South Wales, and Adelaide wants to get all of its power from renewables by 2050.

Gas offers half the emissions of burning coal, but can’t compete with clean wind and solar on that front.

LCE says it has a 2C contingent gas resource of 2963 petajoules at its flagship project within a JORC coal resource of 377 million tonnes.

The company is looking at uses for its gas, and is hoping to deliver a binding gas supply contract in the June half of 2016.

It has previously discussed its use in a fertiliser plant and is discussing pipeline options with APA Group.

It aims to drill its first UCG wells this year.