South Australia will have a Liberal government for the first time in 16 years after Steven Marshall’s party defeated a diminished Labor Party and a faltering Nick Xenophon-led SA-Best.

The Liberals were on track to win at least 26 seats in the 47-seat lower house with 65 per cent of votes counted, the ABC projected late on Saturday.

Liberal leader Mr Marshall said the people of South Australia had “put their trust, their faith in me and the Liberal team” for “a new dawn for South Australia”.

“It’s been way too long between drinks for the Liberal Party in South Australia,” he said.

“Now, we have been given a wonderful opportunity by the people of South Australia.”

SA-Best failed to deliver the three-way contest most commentators predicted. Mr Xenophon came up short in the seat of Hartley, and the party looked unlikely to win a lower house seat as counting continued.

Mr Marshall had ruled out governing with SA-Best, which was aiming to hold the balance of power in the lower house.

“We specifically asked [the voters] to give us a majority government because we know that a majority government will be able to drive the reform agenda that we so desperately need here in South Australia,” Mr Marshall told supporters on Saturday night. 

“I thank the people of South Australia for doing that.”

Outgoing Labor premier Jay Weatherill conceded defeat just before 10.30pm, saying he had called Mr Marshall to convey his congratulations.

“It’s an enormous privilege to be Premier of South Australia,” he said.

“And I wished him all the best on his endeavours to really take that role and make it his own role.

“One of the things we both agree on is this is a great state and he has all of our support to take on this most important role.”

Apologising that he “couldn’t bring home another victory”, Mr Weatherill said he felt like “one of those horses that has won four Melbourne Cups”.

“And I think the handicap has caught up with us on this occasion,” he said.

Labor had been in power for 16 years, but Mr Weatherill’s administration faced a number of troubles in the past term, including the 2016 power blackout and a damning report into abuse at the Oakden aged-care facility.

The quietly spoken but combative Mr Weatherill led South Australia for six years, frequently clashing with the Turnbull government over issues such as energy policy as he sought to transform the state into a renewable energy powerhouse.

Mr Marshall was vying for the top job for a second time, having failed to take the reins of government in 2014 despite his party winning the popular vote.

But an electoral redistribution meant the Liberals went into this election with a notional majority.

Earlier in the night, Mr Xenophon conceded the results had been mixed but had created a “pretty good foundation to build on”.

“This had been an incredible campaign considering we did this pretty much on a shoestring,” he said.

“This is not the beginning of the end, it’s actually the end of the beginning. Because I think we’re going to see some very interesting things happening.”

SA-Best ran in 36 of the 47 seats, which made it difficult for Mr Xenophon to campaign in Hartley while leading the party across the state.

SA-Best was projected to win about 13.7 per cent of the vote across the state, according the ABC, compared with 33 per cent for Labor and 37 per cent for the Liberals.