South Australia's Pelican Point power station will be returned to its full available capacity of 479MW within the next three months, according to its owner, Engie.
Engie said it would spend more than $40 million upgrading its second turbine at Pelican Point after it was withdrawn from the market in April 2015.
The company also signed an electricity offtake agreement with Origin Energy to provide gas to Pelican Point and for a fixed charge Origin gain access to 240MW of electricity, which will be used to supply South Australian customers.
The agreement will run from July 1, 2017 to June 2020 and Origin said it would "better position Pelican Point to support peak demand over the 2017/18 summer period".
Engie chief executive Alex Keisser said having an additional gas generator running will improve security of supply in South Australia.
"We will be able to offer an additional 240MW of energy to the South Australian market," Mr Keisser said.
"Recent events have highlighted the challenges of the National Electricity Market (NEM) in South Australia and by customers contracting Pelican Point's additional capacity, some of the supply pressures experienced in times of high demand could be alleviated."