Adding to the drama, firefighters could not extinguish the blaze because the tower was too high at 67m.
Lack of wind and automatic shutdowns triggered by hot temperatures were to blame for the state's 180 turbines producing just 10 per cent of their maximum power capacity during the January heat wave, according to experts.
The experience proved SA could not rely on wind power to provide electricity when demand was greatest, the Electricity Supply Industry Planning Council (ESIPC) said.
"You never know if the wind will be blowing when you need it to or if wind turbines will shut down," ESIPC spokesman Brad Cowain said.
Operators of the Lake Bonney wind farm, where the turbine fire occurred on Sunday, January 22, said all of its 46 turbines had automatically shut down during the heat wave when temperatures exceeded 40C.
"We want the turbines to operate during peak demand to capture revenue but power output is limited by the automatic shut down to protect electrical instruments," wind farm operator Miles George of Babcock and Brown Wind Partners said.
He said the turbine fire – the first in Australia – had been caused by an electrical fault while maintenance crews were working on it after it had shut down.
Around 3pm, 40 CFS firefighters and six trucks rushed to the wind farm to extinguish the blaze but fire hose water couldn't reach the steel generator at the top of the tower.
Instead, the firefighters watched as fire destroyed the $3 million turbine – which weighs 75 tonnes – and extinguished spot fires ignited by ashes from the turbine blaze.
According to ESIPC, many of the European manufactured turbines used in SA shut down during extreme temperatures to avoid generator meltdown.
"Most turbines are manufactured in Europe where they don't have to worry about operating at high temperatures," Mr Cowain said.
"We are investigating which individual turbines were not operating because of a shut down or lack of wind."
Between Thursday, January 19 and Sunday, January 22, maximum temperatures exceeded 40C throughout most of the state, creating record demands for electricity while wind farm output averaged only 10 per cent.
But during Saturday's peak power demand wind farm output plummeted to just 2 per cent of capacity, producing enough power for only 3500 homes, according to ESIPC. This compared with the maximum capacity of 318MW to power 175,000 homes. SA leads the nation in wind farm energy with five established sites – Starfish Hill, Canunda, Wattle Point, Cathedral Rocks and Lake Bonney.
There are numerous other approved wind farm developments including an AGL plan for 43 turbines at Hallet in the state's Mid North.
But AGL also plans to more than double the capacity of its nearby gas-fired plant, from 180MW to 430MW, at a cost of more than $100 million to ensure peak demand during hot weather can be met.
The state's independent energy regulator Pat Walsh declined to comment about the wind farm performance during the heat wave or its implications on the state's overall energy supply.