Solar thermal group welcomes fed fund

The prospects of a solar thermal power plant being built in Port Augusta are a step closer with the federal government reaffirming support for clean energy projects.

The government has ditched plans to axe the Clean Energy Finance Corporation and Australian Renewable Energy Agency with the two bodies to jointly manage a new $1 billion Clean Energy Innovation Fund.

Repower Port Augusta has been lobbying for federal support to build a solar thermal plant in the town after its old coal-fired power stations close down in May.

It says the new federal fund is great news and it will now reach out to the government for backing.

"This is a massive step forward for our community with the prime minister signalling the new Clean Energy Innovation Fund could be used to fund solar thermal," Repower spokeswoman Lisa Lumsden said.

"We have a company willing to build it, the South Australian government wants to buy clean power and now we've had our strongest statement of support yet from the federal government."

A solar thermal power plant uses a series of mirrors or lenses to concentrate sunlight and heat a liquid to produce steam.

That steam is then used to drive a turbine and produce electricity.