Infratil Energy Australia, a subsidiary of infrastructure investor Infratil, has agreed to buy a 39 megawatt power station in South Australia.
Infratil Energy will buy the diesel-fired station, at Angaston, from Cummins Engine Company. Infratil said it had bought the plant for less than its replacement cost of about A$25 million ($28 million).
The deal is set for completion before the end of March.
Infratil Energy said it had also secured an off take contract, which gave the venture revenue certainty in the medium term.
The power station was commissioned in 2005 and provides backup generation during occasional periods of high electricity prices with its income coming from the sale of electricity price caps.
Infratil Energy Australia chief executive Darryl Flukes said the company was pleased to have bought its first Australian generation asset.
"Over the medium term this investment will be very complementary to Infratil's growing Australian energy retailing ventures."
Infratil Energy Australia undertakes all wholesale gas and electricity purchasing for Infratil's Australian electricity retailing ventures, Victoria Electricity Limited and South Australia Electricity Limited.
Shares in Infratil were down 2c at $3.83 this afternoon, having ranged between $3.23 and $4.15 during the past 12 months.