Delta Electricity eyes coal plant deal
Delta Electricity flags plans to partner with Japanese or Chinese developers to build “clean-coal” power plant within five years.
One of Australia’s leading energy companies has flagged plans to enter a partnership with specialised Japanese or Chinese developers to build a “clean-coal” power plant within five years if Malcolm Turnbull’s energy reform blueprint is implemented.
Ahead of a crucial Coalition partyroom meeting today, industry support for coal-fired power stations is expected to help win over wavering government MPs who must endorse the national energy guarantee to secure support from the states.
Australia’s largest energy users — including BHP, Rio Tinto, BlueScope, Shell, JBS, Tomago and Alcoa — last night wrote to federal MPs urging them to support the NEG, claiming the risk of further inaction was even higher energy prices.
Members of the Coalition’s backbench energy committee received a briefing on the federal legislation for the NEG last night.
As reported by The Australian and first confirmed in June, the federal legislation for the NEG will set the 26 per cent Paris emissions reduction target and is expected to be endorsed by today’s joint partyroom meeting despite opposition from a core group of rebel MPs led by Tony Abbott.
The former prime minister yesterday warned the NEG could lead to the “de-industrialisation of our country”.
Trevor St Baker — chairman of Delta Electricity, which owns the Vales Point coal-fired power station in NSW — told The Australian he would push forward with plans for a “Hazelwood replacement” if the government’s energy framework was introduced. This would involve the Prime Minister fast-tracking a competition watchdog recommendation for the government to step in and underwrite new baseload power generation as an addition to the introduction of the national energy guarantee — an approach being referred to as “NEG-plus”.
Mr St Baker argued that a 1000-megawatt coal-fired power station could be built for $2.5 billion in as little as 4½ years if it was built on a site where there had previously been a power plant with transmission and cooling water capability. Tomago aluminium chief executive Matt Howell said yesterday he would be very happy to talk to investors in new coal-fired stations.
Mr St Baker told The Australian: “The ACCC’s recommendation will nicely complement the NEG. We need a Hazelwood replacement and there are competing parties wanting to work with me in different capacities to bid — on open competitive equal terms against all other options — to offer a Hazelwood replacement as a HELE (high-efficiency, low-emissions) plant. Alternatively we could bid in NSW for an 800MW HELE plant at Vales Point … In NSW it’s critically needed before Liddell closes.”
Mr St Baker rejected Labor arguments that a new coal-fired power station was a fantasy and said he had talked to Japanese and Chinese developers with experience in rolling out HELE plants across the globe. “I am in a position where I would be very interested in doing that as (a) chairman of Delta and (a) 50 per cent owner who intends to purchase the other half,” he said. “I’ve got a track record of being able to undertake these projects.”
Alinta Energy chief executive Jeff Dimery, who launched an unsuccessful bid to take control of the Liddell power station in the NSW Hunter Valley, told The Australian: “To avoid the sudden price spikes we saw when Hazelwood and Northern shut, we need sufficient dispatchable capacity and competition to ensure customers don’t lose out.”
Mr Dimery made clear the ACCC recommendation would assist the company in pursuing its own South Australian gas development and said he had no plans to pursue a new coal plant.
“The ACCC’s recommendation makes sense in markets where you can’t finance dispatchable power developments that will increase competition, lower prices and improve reliability through a long term critical mass of large customer contracts.
“That’s the situation for us in South Australia, where we have the development rights to the 300 MW Reeves Plains gas power station.”
Mr Abbott, who is leading a rebellion against the energy shake-up, has argued that the key test of the policy will be whether it drives investment in new coal-fired power plants. “If you look around the world, the countries with the highest energy prices are the countries that have got the highest percentage of renewables in the system because the problem with renewables is that they are not 24/7 power,” he told ABC. “If it is not 24/7, it is not really power.”
Mr Howell — who runs one of the nation’s biggest energy users taking about 11 per cent of electricity output in NSW with a load of 970MW at “every second of the day and night” — said that “if someone were to be proposing a new HELE development we’d love to talk to them”.
“We can provide counter-party certainty to potential new generation projects … An aluminium smelter is a fabulous customer to have,” Mr Howell said. “They are there using power every day and every night. I think some of the debate we are seeing at the moment is a bit like the tail wagging the dog. We’re saying let’s put in renewables and figure out which industries can afford to use that power. We should not be technology merchants for technology’s sake. We must be merchants of market competitiveness: that is, the industry must be able to be viable under the technology mix supplying the energy.”
Australian Competition & Consumer Commission chairman Rod Sims will brief the Liberal partyroom today on the proposal for the government to become the buyer of last resort for new baseload projects after walking Nationals MPs through the proposal yesterday.
Mr Abbott rejected statements from Mr Turnbull that the NEG had been endorsed by the Coalition partyroom.
“I certainly don’t accept that there is overwhelming support, as the Prime Minister says,” Mr Abbott told 2GB radio. “It would just be appalling if this were to be waved through tomorrow.’’
The energy shake-up must win the backing of the joint party-room after the states refused to sign up to the NEG at a meeting of energy ministers last Friday, choosing instead to hold off making a decision until the policy had been approved by the Coalition backbench.
Mr Turnbull appeared to take a swipe at Mr Abbott in question time yesterday as he took the attack to Labor, lecturing the opposition on “what happens when you allow ideology and idiocy to take charge of energy policy”.
The Labor benches took the reference to “idiocy” as a pointed message to Mr Abbott who told the ABC last night the NEG was “very poor policy” because it was geared towards achieving emissions reduction. “Idiocy is doing more of the same and expecting a different result,” Mr Abbott said.
Energy Minister Josh Frydenberg defended the impact of the NEG on household prices after the Greens won Senate support for the government to release the modelling behind its claims power prices would fall an average of $550 a year. “Australian households will be $550 a year better off, which will see the wholesale price of power come down by about 20 per cent,” he said.
