A $650 million solar thermal power plant planned for Port Augusta will not go ahead after the company behind it failed to secure commercial finance for the project.

Key points: The plant was announced by the former state government in 2017

The plant was announced by the former state government in 2017 It received a Federal Government loan and was promised a State Government electricity contract

It received a Federal Government loan and was promised a State Government electricity contract SolarReserve says it cannot secure funding for the project

SolarReserve's Aurora Solar Energy Project had been hailed as a new start for Port Augusta after the closure of its coal power station in 2016.

The American company operates a similar plant in the US state of Nevada.

Rather than solar panels, solar thermal uses heliostats, or mirrors, to concentrate sunlight onto a tower that heats molten salt.

The heat created is then used to generate steam.

South Australian Energy Minister Dan van Holst Pellekaan said SolarReserve contacted him on Sunday and said it would not be able to achieve financial close by the May 31 deadline set by the Government.

The deadline had already been extended from its original date of February 1, 2018.

The South Australian Government said its power supply was secure. ( Four Corners: Louie Eroglu )

Mr van Holst Pellekaan said the Government had done "everything it possibly can to support this project", including extending deadlines, agreeing to changes to the project to add photovoltaic solar panels and introducing SolarReserve to potential financiers.

"We have remained ready willing and able as a new State Government for the last 12 months to deliver on our side of the bargain," he said.

Former South Australian premier Jay Weatherill announced the 150-megawatt solar thermal power plant had been secured for Port Augusta in August 2017, as part of his government's push into renewables following the 2016 statewide blackout.

Mr Weatherill said the project would be ready to go in 2020 and would supply 100 per cent of the State Government's needs for 20 years.

Earlier in 2017, the Federal Government confirmed it would grant $110 million in a concessional equity loan to support the project.

The loan — first flagged in the lead-up to the 2016 federal election — was guaranteed in a deal struck between the Government and former independent senator Nick Xenophon to get his support for company tax cuts legislation.

Government power supply secure

The Government's energy needs are being supplied under a bridging contract by SIMEC ZEN Energy, the company run by British steel magnate Sanjeev Gupta.

It said its contract expired in November next year, and had an extension option if required.

Sorry, this video has expired The Port Augusta coal power station chimney being demolished.

Mr van Holst Pellekaan said the Government would be putting out a new tender for a long-term electricity contract.

"Very importantly, if SolarReserve is able to sell some of its IP, their land access there, their other permissions … to a third party, that third party will be very welcome to bid into the new market procurement process which we're about to undertake," he said.

Repower Port Augusta campaigner Daniel Spencer said the announcement was "incredibly disappointing news for the local community and all South Australians who campaigned to see solar thermal get up in Port Augusta".

"I think we've got a lot of questions to ask," Mr Spencer said.

"When did the Federal and State Government know this project was in trouble, what did they do to try and fix it, and what are they going to do now to ensure Port Augusta's promised solar thermal project goes ahead?

"This is a project that's too big to fail — it's too big to fail for the people of Port Augusta who were relying on it to provide jobs into the future and it's something that the State and Federal Government promised to the community and there'll be a huge backlash if they don't deliver it."

Opposition says the interconnector is to blame

Opposition Leader Peter Malinauskas blamed the scrapping of the solar thermal power plant on the State Government's plan for an interconnector to New South Wales.

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He said the interconnector project, due to be completed by 2022, prioritised another state's "dirty coal power over South Australian renewable power".

"That was a bad decision and the people that are going to pay the price are the Port Augusta community, but also South Australian power consumers," he said.

He said the former Labor government had also considered an interconnector, but decided it was not in the state's best interests.

"The consequences of that are now starting to play out," he said.

The State Government said the $1.52 billion interconnector would lower power costs and improve network and energy security.

South Australia already has an interconnector with Victoria.

SolarReserve staff in Port Augusta told the ABC no representative would answer questions relating to the collapse of the solar thermal project.

The company's Adelaide office was closed.