Power company Engie will return its Pelican Point power station in Adelaide to full capacity from July in a major boost to South Australia's energy network.
The company says it has secured gas supplies from Origin and has signed contracts to deliver 479 megawatts of electricity to the market from July 1, including 240 mw back to Origin for its SA retail customers.
Premier Jay Weatherill has hailed the decision for increasing local power generation, reducing the state's reliance on power from Victoria.
But, after clashing with the premier at a media conference in Adelaide recently, federal Energy Minister Josh Frydenberg has used the announcement to have another dig at Mr Weatherill over the state government's wider energy plan including the construction of its own power plant.
He said while more gas was needed in the energy network, Engie's move had added "a second coat of paint on that white elephant that Jay Weatherill wants to build".
Engie Australia chief executive Alex Keisser said work would begin immediately on a $40 million upgrade to Pelican Point's second gas turbine to improve its reliability and efficiency.
"We will be able to offer an additional 240 megawatts of energy to the South Australian market, while also creating short-term economic activity through the turbine refurbishment program," Mr Keisser said in a statement on Wednesday.
"With the availability of the capacity of Pelican Point at full load, together with Engie in Australia's wind and peaking generation assets, we have a flexible and sound commercial base with which to run our energy portfolio in SA."
Mr Keisser said recent events in South Australia highlighted the challenges of the National Electricity Market and bringing on extra capacity would alleviate some of the supply pressures experienced during times of high electricity demand.
Pelican Point was opened in 2000 and can cater for about 25 per cent of South Australia's average power needs.
But in 2015, Engie made a commercial decision to remove one of the station's two generation units from the national market.
The second unit has been used on a limited basis since then, including at least once this year when electricity demand spiked during heatwave conditions.
But it was controversially not asked to turn on by the Australian Energy Market Operator in February when thousands of properties in Adelaide and across SA were load shed instead.
Mr Weatherill said Engie's decision would put downward pressure on electricity prices and would help SA move to self-reliance.
"Critically, it makes sure that we have more generation on the South Australian side of the border... making sure that we have the sort of security that we need during periods of peak demand during the summer,' he said.