EnergyAustralia’s Tallawarra gas power plant expansion on pressure deadline

A major gas plant expansion in NSW will be delivered by 2023-24, adding a new source of back-up generation for the power grid amid ongoing fears of electricity shortages.

EnergyAustralia’s Tallawarra B power station in NSW's Illawarra region.

A major gas plant expansion in NSW will be delivered by 2023-24, adding a new source of back-up generation for the power grid amid ongoing fears of electricity shortages as coal exits and delays hit new projects.

EnergyAustralia’s expansion of its existing Tallawarra gas power plant in NSW’s Illawarra with a 300 megawatt facility faced pressure to hit a year-end deadline after the collapse of contractor Clough, one of the main builders of the facility.

A rival plant to be built by the federal government-owned Snowy Hydro has also suffered from a year-long delay, adding to concerns over a lack of replacement generation once AGL Energy’s Liddell coal plant shuts down in April this year.

However, EnergyAustralia said the Tallawarra plant would be commissioned ahead of next summer, suggesting a November timeline to begin testing the facility before supplying gas into the grid.

Tallawarra B will be ready to start generating electricity for 150,000 homes with 30 minutes notice, helping back up growing levels of renewables and providing an extra safety net when big coal stations like Liddell retire after a half century of service.

“It’s been a challenging two months since Clough went into administration,” EnergyAustralia head of projects Tim Walshe said. “To have come out the other side with 200 people working on site and the project remaining on schedule speaks volumes about the level of trust and productivity that’s underpinned the continuation over the past two months.”

The demise of Clough threatened the future of Tallawarra B but a rescue deal finalised in the first week of February saw Italy’s Webuild take on the West Australian contractor’s Tallawarra contract – in conjunction with GE – among a string of other high-profile projects across the resources sector.

Authorities are grappling with an evolving timeline for plugging gaps in the power system, with the Australian Energy Market Operator poised to issue its annual electricity outlook this week, forecasting the chances of any shortages this decade.

The impending closure of Liddell was not expected to cause any shortfalls given Snowy Hydro’s proposed Kurri Kurri gas plant could replace about half the outgoing generation.

The delay of the Snowy gas plant in the Hunter Valley and, long-term, a 12-month setback in delivering Snowy’s 2.0 hydro expansion has placed added pressure on EnergyAustralia to deliver on time.

“Importantly, remaining on schedule ensures Tallawarra B will be on line supporting peak summer demand following the scheduled retirement of the Liddell coal-fired power station,” Mr Walshe said.

Speculation has also emerged that Origin Energy may delay closing Australia’s largest coal power station, Eraring, in 2025 amid fears of power shortages.

The power giant accelerated the closure of Eraring in NSW’s Hunter Valley by up to seven years to as early as August 2025.

However, delays in bringing on new capacity have stoked expectations the coal plant would now remain open for several more years to protect Australia’s electricity system. Macquarie analysts said Eraring was a major issue for NSW, given the delays at Snowy Hydro 2.0. “It may be unpalatable, but Eraring may play an important capacity role.”

The NSW government may ultimately need to step in and provide financial support, according to the broker.

Tallawarra B has been touted as Australia’s first net-zero emissions hydrogen and gas-ready power plant, with direct carbon emissions from the project offset over its operational life. EnergyAustralia will offer to buy 200,000kg of green hydrogen per year from 2025.

Under the funding pact, Energy Australia will offer to buy enough green hydrogen equivalent to over 5 per cent of the plant’s fuel use from 2025 — equivalent to 200,000kg of green hydrogen per year — and will offset direct carbon emissions from the project over its operational life.

EnergyAustralia said on Sunday it was working with the Illawarra Hydrogen Hub to support the development of a green hydrogen industry in the region.

Originally published as EnergyAustralia’s Tallawarra gas power plant expansion on pressure deadline