AGL Energy Limited will close half of its Torrens Island power station indefinitely in 2017 due to decreased demand for conventional power.

AGL Torrens is a natural gas fired power station of eight generating units, four of which were temporarily closed between July and September this year. The units, known collectively as “A station” are now back in operation but will be mothballed in 2017 pending market changes.

The change affects half of the physical generating units at the site but constitutes one third of the generating capacity.

The 177 workers at the site have been advised of the decision, 50 work on the A station. AGL will meet with employees and unions throughout the next two years to manage the shift.

The company attributed the closure to the oversupply of energy caused by an increase in renewable energy generation and a decrease in energy consumption.

“Based on the current market outlook AGL has decided that the Torrens Island A station will be mothballed in 2017,” AGL group general manager merchant energy Anthony Fowler said.

“The decision will be reviewed if market conditions change materially.”

The rising price of gas was also cited as a factor.

Energy Minister Tom Koutsantonis said it was important that AGL was mothballing the units instead of retiring them allowing them to return to service if required.

“The Australian Energy Market Operator’s most recent energy forecasts highlight that SA has adequate energy capacity to meet demand beyond 2023/24,” Koutsantonis said.

An AGL spokesperson said the Torrens Island A generator was the oldest unit in South Australia and the oldest in the AGL inventory.