Underwriting New Generation Investments program

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Underwriting New Generation Investments program is an Australian Government program which was launched in late 2018 to underwrite new privately-owned power generation capacity and new coal plants or upgrades of existing ones in particular.

Background

The program, the Department of Environment and Energy states, is "to increase firm electricity supply and improve wholesale market competition to reduce wholesale electricity prices." While the program is touted as being "technology neutral" and intended to provide "a level playing field to enable the best and lowest cost generation options to be supported" the government has made clear its intention is to support new coal-fired power stations.[1]

While nuclear power projects are excluded, the departent states the program will consider "greenfield and brownfield projects, such as upgrades or life extensions of existing generators."[1]

Registrations of Interest

On February 1, 2019 the Minister for Energy Angus Taylor announced that the Department of Environment and Energy had received "66 submissions." While proclaiming that the program was "technology neutral" his media release described the proposal as comprising "a balanced mix of sources of generation including coal, gas and hydro." He made no mention of projects which included batteries, solar or wind or other technologies[2] even though in a subsequent press conference he referred to the proposals being "for a whole range of different technologies." He said the proposal included "a whole range of different types of projects in these submissions from gas to coal to waste-to-energy to batteries."[3]

In an earlier interview he said of the proposals that "our electricity system needs balance - it needs the reliable, 24/7 baseload power alongside the very significant investment in renewables that is happening right now. it needs the reliable, 24/7 baseload power alongside the very significant investment in renewables that is happening right now."[4]

In an interview on the Alan Jones radio program Taylor said that 10 of the 66 experessions of interest "are for coal". The projects, Taylor said, had a total capacity "equal to more than half of the total capacity of the National Electricity Market."[5] The installed capacity of the National Electricity Market is approximately 50,000 megawatts (MW).

In another interview Taylor said "the only submissions that we'll accept are ones that provide dispatchable power and the reason is because there's been a loss of balance in the system." Asked whether renewables with batteries could be included, Taylor avoided answering the question directly stating only that "I'm not interested in picking technologies."[6]

It was reported that the 66 expressions of interest identified 70 proposed projects including 26 in NSW, 17 in Victoria, 15 in South Australia and 12 in Queensland.[7]

Known projects

While Angus Taylor has referred to there being 66 projects, the only public details are where proponents have voluntarily disclosed details. To date, only three of the 10 mooted coal projects have been mentioned.

One of the co-owners of Sunset Power International, Trevor St Baker has stated that he is proposing two coal projects. Alinta Energy has also indicated it is proposing to upgrade an existing plant.

Trevor St Baker's bid

In January 2019 St Baker told The Australian that he would submit a proposal to Australia's Minister for Energy, Angus Taylor, for government support for three projects: a new A$3-4 billion 1320 MW new brown coal plant at the site of Engie's now closed Hazelwood power station in the Latrobe Valley in Victoria; a new A$2 billion 660 MW black coal plant in NSW's Hunter Valley at either AGL's Liddell power station or adjoining Sunset Power International's existing Vales Point power station; and a 240MW Goat Hill pumped hydro project near Port Augusta in South Australia. St Baker claimed "our plan is the cheapest way to supply the essential firm generation you need for reliable power."[8]

The report claimed "St Baker has lined up a Chinese joint-venture partner" but did not name the company. St Baker said that financing the projects would not be sought from Australian banks but instead would rely solely on international lenders.[8] (See Hazelwood (Sunset Power International) power station for more details.)

Alinta Energy's bid

In late 2018 Alinta Energy flagged that it planned to proceed with a A$170 million upgrade to its 1000 MW Loy Yang B power station in Victoria's Latrobe Valley. It was reported the proposal would increase the plant's generation capacity by 5 per cent.[9]

In its 2019 Environmental Improvement Plan Alinta Energy states that in January 2017 the Victorian Environment Protection Agency granted the company a works approval to upgrade each of the two 500 MW units at the plant. In its plan the company stated "we are scheduled to undertake turbine and generator upgrade projects on Unit 2 in early 2019, followed by Unit 1 in 2020. This work will include two major outages and is forecast to improve Loy Yang B’s emissions intensity (efficiency) by approximately 5% and an increase in electricity by up to 8.6%."[10]

While Alinta has not public released details of its expression of interest, the company's chief executive Jeff Dimery told the Australian Financial Review the company would be seeking the support of the scheme for "marginal improvements" at the Loy Yang B power station. It also reported that Alinta was also seeking funding for "a new 300MW gas power plant in South Australia, gas upgrades in Victoria and Queensland and a pumped hydro project in NSW."[11]

Timeline

  • October 23, 2018: Program announced;[12]
  • November 9, 2018: Deadline for submissions on the proposed design of the scheme;
  • November 7, 2018: The Minister for Energy, Angus Taylor, hosted a roundtable in Sydney;
  • November 9, 2018: The Department of Environment and Energy hosted a consultation forum in Melbourne;
  • January 23, 2019: Deadline for submission of Expression of Interest;
  • January/February 2019: updated program guidelines released and proponents who submitted an EOI and any other interested parties requested to submit proposals due in March 2019;
  • Projects assessed, a recommendation made to the Energy Minister on which project or projects should be supported with a final decision made by the Government with the aim that funds will be allocated at the beginning of the 2019-20 financial year.

Articles and resources

References

  1. 1.0 1.1 Department of Environment and Energy, "Underwriting New Generation Investments program", Australian Government, undated but late 2018.
  2. "Government receives strong response to Underwriting New Generation Investments Program", Media Release, February 1, 2019.
  3. Angus Taoylor, "Transcript - Doorstop, Parliament House, Canberra", February 1, 2019.
  4. Angus Taylor, "Transcript - Interview with Fran Kelly, RN Breakfast, ABC Radio National", February 1, 2019.
  5. Angus Taylor, "Transcript - Interview with Alan Jones, 2GB Radio", February 1, 2019.
  6. Angus Taylor, "Transcript - Interview with Kieran Gilbert and Laura Jayes, AM Agenda, Sky News", February 1, 2019.
  7. Angela Macdonald-Smith, "Power plant backers line up for taxpayer funding", Australian Financial Review, February 1, 2019.
  8. 8.0 8.1 Perry Williams, "Chinese in $6bn clean coal plan", The Australian, January 19, 2019.
  9. Angela Macdonald-Smith, "Alinta Energy CEO sees $170m coal power upgrade as a safe bet", Australian Financial Review, September 25, 2018.
  10. Alinta Energy, "Loy Yang B Environment Improvement Plan FY 19", page 13.
  11. Angela Macdonald-Smith, "Coal vies with storage projects for govt power support", January 22, 2019.
  12. Prime Minister Scott Morrison and Minister for Energy Angus Taylor, "A Fair Deal on Energy", Media Release, October 23, 2018.

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