After months of sustained political attack from the federal government and a series of large-scale blackouts, the premier of South Australia has revealed a plan to take control of the state's energy market.
The state government will invest $550 million in generation and electricity storage, making use of both renewables and fossil fuels.
In an Australian first, a 100 megawatt battery will be constructed to store power from green energy sources.
But the bulk of the money will go to a brand new gas power plant that will be government-owned and operated - a system not seen since the network was privatised in the 1990s.
Premier Jay Weatherill says the market has become overly reliant on ageing power stations.
"Fundamentally here we've got market failure. The private sector is either not investing in new generation, or not investing in maintaining existing generation. That's why governments need to step up."
The battery will be paid for through a new $150 million renewable technology fund.
It will be constructed by the private sector, but it is not yet known which company will get the contract.
Billionaire entrepreneur and Tesla CEO, Elon Musk, has spoken with Jay Weatherill about building the battery unit, but several Australian firms are also interested.
Mr Weatherill says it will make South Australia an innovation destination.
"We've created a new fund that will not only create the jobs and opportunities that come here to South Australia to meet that need, but it sends a message to the nation and the world that we are open for business of this support more generally. All of the start ups and entrepreneurs looking for a place to come, that is interested in new ideas, with a government that is prepared to back them in, they will come to South Australia first."
The announcement follows months of criticism from the federal government.
Ministers accused the South Australian Labor government of what they described as recklessly pursuing a 50 per cent renewable energy target and of being afraid of coal.
Federal Energy Minister Josh Frydenberg says the new spending on a gas power plant proves the premier had it wrong.
"Jay Weatherill made a $550 million admission of failure. Going it alone created South Australia's problems, and going it alone won't fix South Australia's problems."
The premier says South Australia could not afford to wait for a national plan.
Malcolm Turnbull is due to hold crisis talks with the heads of the country's biggest gas companies, including Shell and Origin Energy.
They'll be discussing a recent report from the national market operator that shows Australia is on track for widespread gas and electricity shortages within the next two years.
Experts say Australia has enough gas to meet local demand, but providers continue to favour lucrative exports.
Rod Sims is the chairman of the Australian Competition and Consumer Commission.
"I would say they'd be well advised to make sure they see if they can divert more gas to the domestic market at this time because they do have to watch out for their social licence to operate."
Last week's report from the Australian Energy Market Operator suggested the federal government could take steps to divert more gas from exports to the domestic market.
Tony Wood from the research and policy group, the Grattan Institute, says the federal government should consider new regulations.
But, he says, even the threat of new rules might give companies the incentive to solve the problem themselves.
"The prime minister is meeting with the major gas companies this week to look at the options and I think, again, this is one of those cases where it's absolutely in the interests of the companies themselves to come up with some sensible solutions. Because at the moment, if they don't, the government will be forced to intervene and what the government might do, might make the companies very unhappy indeed. So, now's the time for them to put in some proposals for the government."
