The company said that the operations will not continue beyond March 2018 or it could close as early as March next year.
Alinta Energy said that around 440 employees will be affected by the decision and the company will provide full entitlements to the affected employees.
The company has set aside $75m in redundancy benefits for employees of Flinders Operations.
Alinta Energy CEO Jeff Dimery said: "Our decision to close the business has been made at the conclusion of a detailed strategic review during which we have consulted extensively and investigated a range of options with key stakeholders over recent months, including the South Australian Government."
"Throughout the four and half years that we have been running the business we have investigated all possibilities to find a viable economic solution for its continued operation.
"During this period the company has incurred operating losses in the vicinity of $100 million whilst at the same time investing an additional $200 million to extend the operating life of the Flinders business."
"The decline in demand for energy, as households have become more efficient and the number of industrial customers has declined, combined with policy settings designed to support significant growth in renewable energy generation have together had the effect of causing a significant oversupply of power available to South Australia."