PM’s plan to save coal power plant: Alinta Energy emerges as potential buyer for Liddell
TWO possible buyers have emerged for the ageing Liddell coal-fired power station in a move that would help prevent the looming risk of more blackouts on Australia’s east coast.
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PRIME Minister Malcolm Turnbull has urged energy company AGL to “do the right thing” and sell its ageing Liddell coal-fired power plant to prevent the risk of more blackouts on Australia’s east coast.
The company is under increasing pressure to put the Hunter Valley plant up for sale as two potential buyers emerged today.
Alinta Energy has confirmed today it will make a formal approach to buy the power plant and extend its life until 2029 to prevent a major shortfall in dispatchable power after 2022.
Delta Electricity managing director Greg Everett has also confirmed to Fairfax Media that the company would be interested in buying the plant if it was up for sale.
“If it was for sale we would definitely be interested in doing due diligence on it,” Mr Everett told Fairfax.
Prime Minister Turnbull said it was “in AGL’s interests to be seen to be a responsible player in the electricity market,” while confirming he was the one to phone AGL chairman Graeme Hunt about Alinta’s offer last night.
“AGL should do the right thing by their customers, by the community, and by their own shareholders, and either keep this plant going for another four or five years or sell it to
somebody who is prepared to do so,” he told reporters in Queensland this morning.
“That’s manifestly in the public’s interest.”
Mr Turnbull said there would be “significant issues” for the east coast if Liddell closed in 2022 as planned.
He said there was a three-year period between the plant closing and the Snowy 2.0 project online where there was a risk of a major shortfall in dispatchable electricity.
He welcomed the bids from Delta and Alinta but said there were no government subsidies on offer for them to buy the plant.
Earlier tod Prime Minister Turnbull was the one to phone AGL chairman Graeme Hunt about the offer.
The PM’s behind-the-scenes intervention — first reported in The Australian — was made public after a group of pro-coal Coalition backbenchers announced their intention on Monday to lobby publicly for the government to build a new coal-fired power station.
After the report, AGL confirmed in a statement this morning that Alinta had expressed interest in beginning negotiations last night.
The company said no formal offer had yet been made by Alinta but should there be one, it would be “given consideration in order to meet our obligations to customers and shareholders”.
Alinta Energy managing director and chief executive Jeff Dimery had earlier told The Australian the company saw a commercial opportunity to “facilitate a large customer base and enhance our market entrance strategy on the east coast of Australia”.
Mr Dimery told the publication Alinta Energy was prepared to invest in assets that were “critical to delivering affordable and reliable energy during the transition to a low-carbon economy”.
“(Liddell) is an older plant, it’s coming towards the end of its useful life, but we probably differ from AGL in that we have a view (depending on due diligence) that it could survive a little longer in the marketplace,” Mr Dimery said.
“In respect to the expected shortfall with the planned closure date of 2022, we see a commercial opportunity by extending the life of an asset like Liddell.”
In January, Alinta Energy pledged to drive down power prices after finalising its $1.1 billion purchase of the Loy Yang B brown coal power station in Victoria from Engie and Mitsui.
Alinta Energy’s intervention comes after talks with Manufacturing Australia, who reportedly met with Energy Minister Josh Frydenberg in Canberra last week.
“Manufacturing Australia raised concerns about the impact of the closure of the Northern and Hazelwood stations, and were realistic enough to understand the closure of Liddell, which is bigger than both Northern and Hazelwood, could be of concern, and they’re looking at ways to mitigate the risks associated with that for as long as possible,” Mr Dimery said.
“We’re looking at pursuing this opportunity provided it makes commercial sense for all parties, by signing a forward contract that would push those dates to the late 2020s when more dispatchable power comes into the market.”
Manufacturers are concerned about energy shortfalls in NSW if Liddell is closed.
It comes after the Australian Energy Market Operator warned in March that the plant’s closure would create a one-in-three-year risk of power outages, lasting up to five hours, for 200,000 homes.
Liddell currently provides more than 10 per cent of NSW’s energy.
AGL chief executive Andy Vesey pledged last September that the company would consider selling the plant when he met with Mr Turnbull, Mr Frydenberg, Treasurer Scott Morrison and former deputy prime minister Barnaby Joyce.
Mr Frydenberg told The Australian the government would be pleased to see Liddell remain open or sold by AGL to another party on a commercial basis.
“The interest shown by Alinta and the members of Manufacturing Australia in the future of Liddell is a positive sign and we hope the parties can enter into a constructive discussion,” he said.
POLITICAL PRESSURE
Mr Turnbull’s intervention has appeased a group of backbenchers within his own government calling for more coal-fired power to help stabilise the east coast energy grid and push power prices down.
The group yesterday released a letter calling for the government to build a new $4 billion coal-fired power station on the site of the now-closed Hazelwood plant in Victoria.
The letter poses the question: “If the government can intervene to build Snowy 2.0, then why not intervene to construct Hazelwood 2.0?”
The group calls itself The Monash Forum after John Monash, a war hero and key figure in opening Victoria’s Latrobe Valley to coal production.
About 20 MPs have signed the letter, including former Prime Minister Tony Abbott, former deputy Prime Minister Barnaby Joyce and Liberal backbenchers Kevin Andrews and Eric Abetz.
Senator Abetz this morning welcomed reports Mr Turnbull had called the AGL chairman to notify him of Alinta Energy’s interest.
He told Sky News extending the life of Liddell would “hopefully” negate the need for a new coal-fired power station.
“At the end of the day what we’ve got to do is put absolutely everything on the table,” he said.
Liberal backbencher Craig Kelly yesterday denied the Monash Forum was designed to damage Mr Turnbull’s leadership as the Prime Minister approached his 30th Newspoll defeat — the same number he used to justify rolling Mr Abbott for the Liberal leadership.
Amid the agitating, Home Affairs Minister Peter Dutton last night told Sky News’ Andrew Bolt that any Cabinet minister who was not loyal to Mr Turnbull should resign.