Vales Point coal power station profit plunges
RICHLISTERS Trevor St Baker and Brian Flannery have slashed the value of their NSW power station after a steep fall in annual profits, as pressure grows on the role of coal generation in Australia’s power grid.
The value of Vales Point power station near Lake Macquarie, which supplies about 4 per cent of power for the national grid, was chopped to $156m for the 2021 financial year compared with $555m three years ago, documents lodged for Sunset Power International with the corporate regulator showed.
Sunset’s annual profit slumped 93 per cent to $10m.
The plant has delivered bumper profits since the business duo bought it for just $1m from the NSW government in 2015.
But rampant renewable energy supplies have rapidly eroded the influence of coal in the market and led to a sustained period of low power prices, piling pressure on the profitability of ageing generators, including Vales Point.
A lift in renewable generation and lower demand for electricity due to the pandemic led to lower prices and cuts to production at Vales Point, filings show.
Experts expect coal plants may be forced to close earlier than planned given their difficulties competing with renewables.
Delta Electricity, which operates Vales Point, said it would still run the station until 2029 and expects other high cost plants to drop out first.
“The market needs baseload plants,” Delta chief executive Greg Everett said. “Obviously the transition is happening, but it’s going to be the high cost ones that will drop out probably sooner.
“I think that phenomenon might change a little bit as we get further into the energy transition and it’s just going to be the higher cost ones that will have to probably quit.”
A $10m dividend was paid for 2021, down from $62m a year earlier, with the Sunset owners continuing investment in the Chain Valley mine which supplies Vales Point, after buying out the facility in 2019 following its collapse into administration.
Delta said the looming closure of AGL Energy’s Liddell coal plant, which will hike NSW power bills in 2022-23, had led to higher contract futures prices in 2022.
NSW Energy Minister Matt Kean has said the nation’s coal plants could be tipped out of the electricity market earlier than planned.
Vales Point and Origin’s Eraring station are due to start closing units from 2029, according to the Australian Energy Market Operator, but facilities are increasingly having to switch off during daytime hours when high solar supplies undercut them on price.