New bidder for AGL Energy’s Liddell coal plant
Power baron Trevor St Baker has emerged as a second potential buyer of AGL Energy’s Liddell coal plant in NSW.
Power baron Trevor St Baker has emerged as a second potential buyer of AGL Energy’s Liddell coal plant in NSW as a joint government taskforce weighs replacing or delaying its exit to avoid a supply squeeze for electricity users.
With Alinta Energy open to rekindling last year’s rejected bid for Liddell in an attempt to keep the 1680 megawatt generator open for longer, Mr St Baker has also weighed in, declaring his interest in rebooting the plant beyond its 2023 exit.
“We’d be a bidder for buying Liddell on the basis that all of its rehabilitation costs were done and paid for,” Mr St Baker told The Australian. “We have a track record in being able to deliver the generation that the system needs when the market is open and technology neutral.”
Federal Energy Minister Angus Taylor and the NSW Berejiklian government announced the creation of a commonwealth-led taskforce last week to consider extending the life of Liddell or replacing its baseload supply to ensure affordable and reliable energy for the state.
The industry veteran, who part-owns the 1320MW Vales Point plant on the NSW Central Coast, said all options must be considered as part of the government’s review of the ageing asset, including its extension into the next decade.
“We cannot risk another repeat of Hazelwood and in that sense we need to be smart about this,” he said.
The future of the nearly 50-year-old plant — which provides 10 per cent of the state’s power — has proved politically contentious for several years after Malcolm Turnbull fought a bitter brawl with AGL to delay its closure or sell it to other suitors that would invest in its extension.
Governments, both state and federal, are worried they may face a repeat of the market chaos that followed the closure of the giant Hazelwood coal plant in Victoria two years ago, which contributed to a 40 per cent surge in power prices.
Wholesale power prices remain elevated after jumping across the national electricity market in the second quarter of 2019 due to reduced supply from Victoria’s coal plants and lower hydro generation, combined with higher gas tariffs.
AGL conceded some ground this month by committing to keep the plant open until the end of the 2022-23 summer.
But after previously estimating it would cost $920 million to keep it open until 2027, it confirmed last week it has no interest in running it beyond 2023.
Energy expert Tony Wood questioned the need for a government taskforce on a single coal plant and says pro-coal forces may be partly agitating for such an investigation.
“I think the proposal reflects the continuum of views in the government that hasn’t much changed since the departure of Mr Turnbull and Mr Abbott,” Tony Wood, energy program director at the Grattan Institute, told The Australian. “Angus Taylor is in a really difficult place, trying to appease the party room and make sensible market and economic decisions. In today’s environment, the former will always win.”
Mr St Baker’s Sunset Power has bid for Australian coal plants on the market in recent years, along with redeveloping operating assets like Liddell and floating the option of resuscitating ageing stations like Hazelwood before their closure.
Mr St Baker’s Delta lost out to Alinta to buy the Loy Yang B generator in Victoria last year and back in 2016 failed to stop the demolition of Alinta’s Northern power station in South Australia after a mooted deal to extend the plant fell through.
A similar plan to acquire the Hazelwood plant from French owners Engie came to nothing amid an accurate warning by the Brisbane rich-lister that its closure would send power prices soaring.
But after paying just $1m for Vales Point in 2015, Mr St Baker is now considering a plan to extend the life of the ageing plant beyond 2029 for a further 20 years as part of a $1 billion injection.
And he says the same logic can be applied to the Liddell plant if he gets the opportunity.
“At 39 years old Vales Point broke its all time-record of continuous operation because we kept it reliable and maintained and refurbished it as necessary,” Mr St Baker said. “If maintained correctly there is no natural life for a baseload coal-fired power station other than when its economical fuel supply runs out.
“That’s the only thing that determines it.”
Alinta, Australia’s fourth-largest electricity retailer, told The Australian last week it was not “naive” and saw potential investing in the asset should it come to market.
It lobbed a $250m cash bid for Liddell last year that failed to tempt AGL, with Mr Dimery at the time estimating $1bn may be needed to buy the plant and reinvest in modern machinery.
Still, experts question whether the taskforce into Liddell may increase the risk of more government intervention, illustrated by price re-regulations this year and looming “big stick” divestment laws due this spring.
More Coverage
