Coal-fired power stations at Port Augusta in South Australia, and the outback mine which supplies them, will close from early 2018 or possibly sooner, Alinta Energy says.

The company said its Northern and Playford B power stations and Leigh Creek coal mine would not operate beyond March 2018 and might close even sooner.

The closures are not expected before next March but were inevitable as operations had become "increasingly uneconomic", according to the company.

Alinta Energy chief executive officer Jeff Dimery said 438 workers stand to lose their jobs, 258 of them at Leigh Creek and 180 at Port Augusta.

Workers found out about the decision through the media but have since been spoken to by company management.

Mr Dimery said factors including the performance of the plant and workplace safety would influence the precise date the plant is closed.

Two firefighters and a worker were injured at the plant on Monday when a fire caused an explosion.

"If people are getting injured at work then that would bring forward the closure date," he said.

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Mr Dimery said the decision to close the plants and mine followed a strategic review.

He said there had been a decline in energy demands in SA as the number of industrial customers had fallen and households had become more efficient, meaning the state had a significant oversupply of available power.

"There's excess supply of generation and there's been a significant reduction in consumer demand," he said.

"That has put a lot of downward pressure on wholesale prices and as a consequence of that we're unable to generate enough revenue to support the cost structure of the business.

History of coal-fired power in SA 1943 Coal mining began at Leigh Creek

Coal mining began at Leigh Creek 1954 Port Augusta power station commissioned to provide baseload power for SA

Port Augusta power station commissioned to provide baseload power for SA 1960 Power station renamed Playford

Power station renamed Playford 1985 Northern power station commissioned

Northern power station commissioned 1999 Power firm ETSA privatised, along with power stations

Power firm ETSA privatised, along with power stations 2012 Playford B station mothballed

Playford B station mothballed 2015 Alinta announces mine and power station closures by 2018

"Households are far more efficient. They're far more energy conscious. Appliances are far more efficient."

The company said it was liaising closely with the South Australian Government, unions and the communities at Port Augusta and Leigh Creek about the changes.

Mr Dimery said that during more than four years of running the business, Alinta had incurred operating losses of about $100 million while also investing another $200 million to extend the operating life of the business.

The Australian Energy Market Operator said the Northern Power Station, which has a capacity of 546 megawatts, has been operating at only 50 per cent for the past year, while Playford B plant has been offline.

The Northern Power Station was taken out of service following Monday's fire, which caused an estimated $100,000 damage.

'As bad as Holden closure' for affected communities: MP

South Australian Premier Jay Weatherill announced the Government would provide an initial $1 million to support the communities most affected by the closure decision.

News coverage of the governor opening Port Augusta power station in 1954. ( State Library )

"We've already established a task force which will be led by Minister [Kyam Maher]. The State Government has immediately established an Upper Spencer Gulf community engagement team to provide support and advice to the regional communities," he said.

Mr Maher, who is Manufacturing Minister said the Government would ensure there were "people on the ground" at Leigh Creek and Port Augusta within the next day to help deal with what would be a challenging time.

Alinta Energy's decision coincides with another rise in the state's unemployment rate, up from 7.2 per cent to 7.6 per cent last month, which is now the highest in the country.

Opposition MP and local member, Dan van Holst Pellekaan, called for money to be allocated in this month's state budget to address the impact of the closures.

"We're going to lose nearly 500 jobs in the north of South Australia, that is every bit as serious for our part of the world as the Holden closure is for the north of Adelaide so we deserve at least a good a reaction from the State Government with regards to financial and other types of support," he said.

South Australian Greens Senator Penny Wright said it would be crucial the State and Federal Governments backed Port Augusta to shift to solar-thermal power generation.

"We really need governments to get behind the various companies that I know are interested in looking at solar-thermal," she said.

Port Augusta Mayor Sam Johnson agreed renewable energy had the potential to fill the economic gap that was likely to be left by the shutdowns.

"I still believe Port Augusta will be the nation's capital of renewable technology, there is a clear way in which we can begin to lead the way through renewable technology, such as wind, solar and importantly solar-thermal, but again we need that Federal Government policy framework to be able to support that," he said.

Community concern for future of Port Augusta, Leigh Creek

Three generations of Gary Rowbottom's family have worked at the Port Augusta power plant, including his father and his son.

He has worked there for 16 years, and said today's announcement was "something of a shock".

"I'm too young to retire and job prospects for a 50-something aren't the greatest so it is of some concern to me," he said.

Alinta Energy worker Gary Rowbottom has worked at the Port Augusta plant for 16 years. ( ABC News )

"It was unexpected to be that imminent.

"The whole town will feel the effects, but we've had job losses before - the railways etcetera - and we will survive."

The chair of the Outback Communities Authority, Cecilia Woolford, said the impacts of the mine closure in Leigh Creek would be felt across the area.

"Leigh Creek's the service centre for quite a few of our communities including Blinman, Copley, Nepabunna, Marree," she said.

"It's the education centre, it's the service centre, it's even the mail centre, [the] hospital."

Colin Fenney from the Australian Manufacturing Workers Union said it was more bad news for communities which had struggled as mining was in the doldrums.

"It's devastation [for] the northern region, we've had the close of Peculiar Knob up there with the mines, the Roxby [mine] expansion hasn't gone ahead," he said.

"The [future] jobs in the north, I don't know where they're going to come from after this, it's going to absolutely devastate Port Augusta."

He said the same was true of Leigh Creek.

"The town of Leigh Creek only revolves around the mine, they own the town so that town - Leigh Creek - will disappear off the map once they shut the mine," he said.

"We need to find some more resources and some industries we can move into that region so it doesn't become a ghetto.

"Of course we'd like to get back on board with BHP and do something with Roxby because, I know commodities are down at the moment, but really the north needs a Roxby Downs or something to kick off so we can keep people living in that place and sustain employment."

The State Government has set up a phone number (1800 294 446) to provide assistance to affected communities on the Upper Spencer Gulf.