Qld power station partner hit by $20m loss following fire
The troubled coal-fired Callide Power Station has been a financial millstone around the neck of joint owner IG Power to the tune of almost $20m.
The troubled coal-fired Callide Power Station has been a financial millstone around the neck of joint owner IG Power to the tune of almost $20m, with the firm’s collapse putting further pressure on already elevated power prices leading into winter.
Deloitte restructuring partners Grant Sparks and Richard Hughes were last month appointed voluntary administrators over a number of IG Group entities, which along with the Queensland government-owned CS Energy owns half of the damaged power station.
A section of the station near Biloela in central Queensland suffered major damage from a fire in May 2021 with efforts now underway to bring the unit back into service.
Another part of the plant was forced offline after a cooling system collapsed. According to annual financial filings to ASIC last year, IG Power suffered a $19.5m loss in 2021 compared to a profit of $36.8m the previous year.
The failure of IG Energy is expected to put further pressure on already elevated power prices leading into the winter and also fast-track Queensland’s move away from coal-fired generation to wind, solar and other renewables.
IG Power director Brett Tengdahl in a report attached to the filing said the loss was primarily due to one of the station’s units being offline due to the explosion, with the company recording a $7.46m deficit on the disposal of assets.
The report also noted IG Power’s parent company InterGen Energy had propped up its subsidiary between January and March last year, buying more than $28m m in new shares.
About $12m of capital was injected into the group in 2021 with capital expenditure of $12.2m. Deloitte said Callide C has experienced “operational challenges” since May 2021 following the two infrastructure failures.
It is not the first time IG Power has hit the skids, entering receivership in 2016 after it was unable to refinance its debts of $264m.
CS Energy recently announced it expected Callide C to be back on line in September 2023. Deloitte said the directors had appointed the administrators due to an ongoing failure of shareholders to agree future funding of the joint venture.
A CS Energy spokesperson said the company remains “committed to the safe and timely reinstatement” of Callide C and was working through “options to achieve this.” “For our people at Callide C it remains business as usual,” the spokesperson said.
Nearly half a million homes and business across the state and down into NSW lost power in May 2021 after the generator unit caught fire and exploded.
The incident caused 3100MW of energy to be wiped off the grid. CS Energy also has been financially impacted hit by the Callide breakdown, recording a net loss after tax of $95.5m last year following a $269.6m loss in the previous year.
CS Energy increased borrowings by $334.4m last year as a result of the financial impact of Callide unit remaining offline, delays to the receipt of material damage and
business interruption insurance compensation proceeds related to the incident, and the increase in collateral payments associated with the energy market trading activities of the group. This increase was primarily funded through a $200m temporary increase in its working capital facility to $425m from $225m in 2021.
CS Energy, which generates and sells electricity into the National Electricity Market, is increasingly investing in new energy assets, including solar and wind farms, renewable hydrogen and storage.
CS Energy last year signed a memorandum of understanding with global renewable energy firm EDF Renewables to develop the Banana Range Wind Farm in central Queensland.
Under the agreement, CS Energy is considering both an offtake agreement and equity participation in the proposed 230 megawatt project.
Construction is expected to commence in 2024 before coming online in 2026, generating enough energy to power 15,000 homes.
At Kogan Creek Power Station, the company said it has achieved key milestones for the renewable hydrogen and battery projects that will form part of a new energy hub.
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