NSW ‘pandering’ to Morrison government by declaring Hunter Valley gas-fired power station essential
The NSW government has granted critical infrastructure status to a proposed new gas-fired power station in the Hunter Valley in a move energy analysts say is “pandering” to the federal government.
The state’s planning minister, Rob Stokes, said he made the declaration because the commonwealth proposal to build the power station on the site of a former aluminium smelter in Kurri Kurri had “significant economic potential”.
The Morrison government has said it would commission Snowy Hydro to build the power station as part of its so-called “gas-fired” recovery from the Covid-19 pandemic if the private sector does not invest in 1,000 megawatts of new energy capacity by April next year.
The federal government has demanded a new gas-fired power station be built to replace the ageing Liddell coal-fired power station, which is due to close by 2023.
The government has claimed new electricity generation is urgently needed, despite its own taskforce and the Australian Energy Market Operator (Aemo) finding this is not the case and that other committed and probable projects would be “more than sufficient” to maintain energy reliability.
Stokes said on Wednesday he was declaring the proposed station at Kurri Kurri critical state infrastructure because of its “importance for future energy supply”.
“With another player in the energy market, it increases competition and will help mitigate the closure of Liddell’s coal-fired power station in 2023, putting downward pressure on electricity prices,” he said.
“Gas-fired power stations will have a critical role to play in ensuring our energy security as we transition to a low-carbon emissions economy with renewable energy projects such as wind and solar.”
He said, if approved, the project would create 600 jobs during construction and “generate up to 750MW of electricity”.
But Richie Merzian, the climate and energy program director at progressive thinktank the Australia Institute, called the decision another sign Australian governments were “quick to back in more fossil fuels”.
“NSW is in a tough position. It wants to go hard into the renewable space but it has to keep the federal government on side,” he said.
“This is pandering to the gas-fired government in Canberra.”
Merzian said the state government should instead keep its focus on its multi-billion dollar roll-out of new renewable energy zones across the state.
The state parliament passed the government’s energy bill in November after a mammoth debate and attempts by One Nation MP Mark Latham to block the legislation by moving hundreds of procedural amendments.
The NSW environment minister, Matt Kean, has promised the most ambitious energy plan in the country, with the government to underwrite the private sector in building 12 gigawatts of solar and wind – roughly as much clean energy as is already in the national grid – and two gigawatts of energy storage.
Merzian said Stokes’ decision would increase public scrutiny of the proposed Kurri Kurri project and predicted that, like the Narrabri gas project, it would be “heavily challenged, including potentially in the courts”.
Dylan McConnell, an energy expert with the University of Melbourne, described the state government’s declaration as “odd”.
“It’s putting the cart before the horse in terms of calling it a critical infrastructure project given the Aemo analysis has suggested it’s not needed,” he said.
“For the government to pull the trigger and build it, they’re not going to make a decision until April next year if the private sector doesn’t step up to the plate and build capacity themselves.
“So it seems to be a funny thing to call it critical infrastructure.”
If Snowy Hydro pursues the project it will still have to undergo a full state environmental assessment.
A spokesperson for federal energy minister Angus Taylor said the AEMC’s finding that NSW residents’ electricity bills could rise following the closure of Liddell shows “that we need to get new dispatchable generation up and running in NSW before Liddell exits”.
“This is why the Morrison Government set industry a 1,000MW dispatchable generation target in NSW,” the spokesperson said.
“The energy companies have until 1 April 2021 to reach final investment decision on new dispatchable capacity. The Morrison Government is preparing to step up if the energy companies don’t to ensure households and businesses have affordable reliable power.”