AGL has announced it will shut down its Torrens Island "B" gas power station in South Australia in 2026, nearly a decade earlier than expected.

The energy giant originally flagged it would cease all operations in 2035, to transform it into a low-carbon industrial energy hub.

The new closure date of June 2026 will coincide with the planned completion of the state's new interconnector with New South Wales.

The first of the station's four B units was mothballed in October 2021 and all four will close on June 30, 2026.

Energy Minister Tom Koutsantonis said the station's closure should not negatively affect South Australia's power supply, but it was a blow to the state's "sovereign capability".

"We will have enough power to supply ourselves and it won't be closing for another four years," he said.

"But what it does show is that when you interconnect with larger jurisdictions you displace all your own thermal capacity."

AGL chief operating officer Markus Brokhof said closing was a "tough decision" but the Torrens Island B station, which began operations in 1976, was losing millions of dollars.

"We are losing money with this power station here in the current environment and this will be just emphasised by the new built interconnector — which is currently under construction — EnergyConnect," he said.

The government and AGL has reached an agreement to ensure the B units remain operational until the interconnector is built, with the energy giant to receive $19.5 million to keep 200 megawatts of extra power online.

"Ultimately the responsibility for their contracts and gas supply is AGL's," Mr Koutsantonis said.

"What the state government is helping subsidise is the routine maintenance, the refurbishment that is required on that unit, to keep it operational over the next period."

Demolition of the existing station will begin six months after it closes.

"We've always said this is not the end of Torrens Island, we want to convert this island into a low-carbon energy hub and that is what we are doing," Mr Brokhof said.

Workforce faces uncertainty

Mr Brokhof said 120 employees would be affected by the closure, but it was "too early to say" how many of those people would lose their jobs and how many would be able to be retrained and employed in other areas.

Mr Koutsantonis said he was concerned about job losses but AGL's investments in renewable technology at Torrens Island "may be able to soak up a lot of those job losses" and some may be able to work at the government's under-construction generator in Whyalla.

"Hopefully we can transition a lot of these workers from one generator to another," he said.

The Australian Services Union assistant secretary Scott Cowen said the 120 workers now face significant uncertainty.

"And it's really concerning in terms of the preparedness for future job security in the energy generation sector in South Australia to be able to make sure that the workers still have certainty moving forward," he said.

SA reconnects to national grid

Meanwhile, South Australia's interconnector with Victoria has been repaired, reconnecting the state to the National Energy Market.

A transmission tower near Tailem Bend was toppled during a severe storm more than a week ago, isolating the state from the national energy grid.

The tower was originally expected to be up and running on the weekend, but another vigorous cold front further delayed repair works.

The interconnector's operators Electranet said the installation of temporary transmission towers meant the network has returned to normal operations, reducing the need for generation constraints.

Planning is now underway for a new, permanent transmission tower.