Mining billionaire Andrew Forrest vows to solve NSW energy crisis and cut electricity prices

Mining magnate Andrew ‘Twiggy’ Forrest claims he has the solution to NSW’s looming energy crisis and has doubled down on his promise to deliver green hydrogen to the state.

Mining magnate Andrew ‘Twiggy’ Forrest claims he has the solution to NSW’s looming energy crisis and has doubled down on his promise to deliver green hydrogen to the state.

Just two weeks ago the billionaire slashed 700 jobs globally from his Fortescue Metals Group and scrapped his target of producing 15 million tonnes of green hydrogen a year.

But in an exclusive interview with The Saturday Telegraph, Mr Forrest angrily refuted claims he was abandoning green hydrogen and vowed that his ambitious gas plans would keep electricity prices down for NSW households.

He said his “plan A” had always been green hydrogen power but he also had “a bulletproof plan B” under way in Port Kembla on the NSW south coast.

“Now that plan B is able to facilitate the lowest cost of energy and the most reliable energy in the world for the people of New South Wales,” he said. “And if Victoria wants to connect up to it, for the people of Victoria as well.”

Fortescue executive chairman Andrew ’Twiggy’ Forrest has doubled down on his promise to deliver green hydrogen to NSW. Picture: Supplied

His remarkable vision is the modern equivalent of taking coal to Newcastle — he is importing liquefied natural gas (LNG) from overseas to a state that has abundant supplies of its own underground.

“It looked really clear, the writing was on the wall,” he said. “Port Kembla was really critical so we pushed the accelerator down hard.”

The rush to renewable energy and retirement of coal-fired power plants means that the demand for gas-fired power is soaring to firm supply when the wind is not blowing or the sun is not shining.

“What I felt would always be the case with green electricity is that there’d be a 5 or 10 per cent gap and we must be able to fill that gap,” he said.

But gas supplies in NSW have been signed away for export until at least the middle of the next decade and the gas pipeline from Queensland is already full.

Four years ago Mr Forrest put $500m of his own money into building a giant LNG gas import terminal at Port Kembla. Its floating gas terminal The Galleon will be here in time to meet the expected shortfall in gas supply in 2026.

Squadron Energy is building Port Kembla Energy Terminal (PKET), Australia’s first LNG import terminal and the only one under construction.

His Japanese investors did not share his vision and pulled out of the deal, but the man who made his billions by spotting his first iron ore sites from the air stuck to his guns and went alone.

Last week he flew into Port Kembla to meet staff and reassure them of his commitment to his renewable and green energy plan.

The first stage of his vision has proven correct. The Australian Competition and Consumer Commission’s most recent gas inquiry report found that gas shortfalls would hit the east coast even sooner that expected.

“Gas shortfalls are projected to emerge from 2027 unless new sources of supply are made available,” the report said.

“Import terminals may also help to address supply gaps,” it said. “Although their viability is subject to international prices for LNG.”

And that is the second stage of Forrest’s vision. “It really came down from an understanding that there would be a glut overseas,” he said. “Gas prices around the world would fall, because demand is consistent, but supply was accelerating.”

Australian Energy Producers chief executive Samantha McCulloch says NSW needs to prioritise developing its own gas reserves. Picture: Tom Huntley

Meanwhile, he said producers in Australia would keep the prices high and “keep Australia uncompetitive as an economy and keep the cost of living high” for Aussie families.

His $500m gamble is that he will be able to import enough cheap gas from already developed fields in places like the US during the low-price northern hemisphere summer to keep the lights on in NSW.

To do that he is also building “plug and play” gas-fired power stations in Wollongong and Dubbo that can turn on to provide the 15 per cent of peak power that wind and solar cannot meet.

And that provides the last part of the puzzle to achieving his gold standard “plan A” of green hydrogen, produced affordably with cheap electricity from his gas power plants which can later be converted to run on hydrogen.

“Renewable energy has, is and will always be the answer. We have to firm it. We can firm it with green hydrogen,” he said.

“We don’t have it yet because the electricity price has been so high, but we’ll rip down the cost of electricity.”

David Richardson, senior researcher at the Australia Institute, said importing cheap LNG was a clever solution to a self-inflicted problem that has been years in the making.

“Australia’s gas problem is not a shortage of supply but letting the gas companies tie it all up for export,” he said. “This is a solution to a problem that should not exist in the first place.”

Squadron Energy CEO Rob Wheals (left) and Andrew Forrest at the under-construction Port Kembla Energy Terminal. Picture: Supplied

The Narrabri gas field can supply the state’s needs but it remains tied up in red tape and producer Santos concedes it will not be ready before the shortfalls predicted by the Australian Energy Market Operator (AEMO) hit the market.

“Complex, lengthy approvals and appeals processes at both levels of government mean NSW gas users will not have access to the gas under their feet before forecast shortfalls come into play,” a Santos spokeswoman told The Saturday Telegraph.

“This is a significant factor in cost-of-living pressures.”

Despite these problems, the Australian Energy Producers chief executive Samantha McCulloch insisted the new LNG import terminals “do not address the urgent need” to bring on domestic gas supply.

“Instead of outsourcing their energy security to other states — or to the international LNG market — NSW and Victoria should be prioritising the development of their own abundant gas reserves,” she said.

A spokesman for the NSW Department of Energy said AEMO had been commissioned to conduct a NSW gas infrastructure review which would consider whether additional gas storage was required in NSW.’

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