At the end of last week, South Australia baseload futures prices topped $107 a megawatt hour for 2017, which is double the Victorian price of $50 with NSW standing at $57. South Australia's futures price for 2018 was also elevated, holding clear of $100 before a slight decline to $93 for 2019, with prices in Victoria and NSW showing little change over the same time frame.

The prices underscore the difficulties confronting the state given its high reliance on renewables energy which is pricing gas-fuelled power stations out of the market, creating volatility.

The extreme futures prices have emerged against the backdrop of acute volatility in wholesale electricity prices in South Australia which has prompted a renewed push to upgrade power links with Victoria and possibly NSW which may help stabilise the market there – but at significant additional cost.

APA Group, which operates electricity and gas transmission links, has disclosed it is progressing plans to upgrade the connector it manages between South Australia and Victoria. The move has come as the South Australian government said it would conduct studies into upgrading interstate connections in a bid to lower power costs, which has also prompted Electranet, an associate of China's State Grid, to also look into further upgrades to the connector it also operates linking the two states.

South Australia has the highest wholesale electricity costs in the national electricity market which is a result of its high reliance on intermittent renewable energy sources that require gas-fired power stations which can be quickly turned on to fill any shortfalls.

APA manages Energy Infrastructure Investments, a fund in which it has a 20 per cent stake with Japanese partners Marubeni Corp and Osaka Gas holding the balance. The venture owns Murraylink, which connects the South Australian and Victorian electricity grids, along with Directlink, which connects the NSW and Queensland grids.

"There is scope to expand," APA Group chief executive, Mick McCormack said. "We're looking at that as we speak."

Murraylink can transport 220 megawatts of electricity between the two states, although technical constraints often limit it from maximising that throughput. A separate link at Heywood, further south, is finalising an upgrade to be able to handle 650MW up from 460MW at present.

This expansion was delayed for several years while the proposal was being assessed, while Murraylink had derailed earlier plans to link the NSW and South Australian grids.

Electranet, which owns the Heywood link is also studying another line linking South Australia and either Victoria or NSW.

The wind resource along the South Australian coast is one of the best sources of renewable energy in Australia, although often supply runs ahead of demand, so that boosting capacity to supply into Victoria would provide an outlet for some of this output.

Similarly, power demand in South Australia can run ahead of the ability of local power companies to supply at times when output from renewable energy sources is restricted, so that boosting imports from Victoria is essential.