Energy Australia is warning its investment case for a new gas-fired power station could collapse as debate over energy policy heads towards a crescendo.
The Government has not yet refused to rule out whether it will write in the construction of new coal power stations into the plan, in order to convince unruly elements of its backbench to vote for it.
State and territory leaders are set to vote on the Government’s National Energy Guarantee (NEG) within weeks at the next COAG meeting.
There are concerns from pro-coal coalition members that the NEG is anti-coal, while others have argued it’s pro-coal. So, which is it?
“From an industry perspective, the National Energy Guarantee is neutral, we do not see it as anti-coal or pro-coal,” Energy Australia’s energy boss Mark Collette said.
However, speaking on The Business, Mr Collette indicated that, if the Government was to bow to internal pressure and subsidise a new coal-fired plant, Energy Australia’s planned $400 million gas power plant south of Sydney, Tallawarra B, would be uneconomic.
“The new power station provides really good capacity into the New South Wales market but, if there is going to be Government-funded coal power stations coming in or other changes of that nature, it does mean that this one probably would not happen,” he said.
“Effectively, the Government will crowd out the scheme.”
While Mr Collette acknowledges gas is very expensive to run, Energy Australia plans to use Tallawarra B as a back-up to the cheap large-scale renewables being built into the network, to meet the NEG’s reliability requirement.
Enough renewable sources of power either have, or are, being built that the massive Hazelwood power station will be replaced twice over within two years of its closure.
The NEG framework, as it stands, could be used by future governments to ramp up emissions targets beyond the current 26 per cent reduction targeted to Labor’s 45 per cent target.
It is something that worries some Coalition backbenchers, but not one of Australia’s largest energy companies.
“Certainly, the emissions dial can be dialled up and down according to the governments of the day, but we see that as appropriate,” Mr Collette said.
“The whole reason we have governments is to implement policies, so that people will vote them in, they will take the choices and then we will deliver.”
Another potential challenge for energy providers is the spectre of a royal commission.
Rarely seen singing from the same song sheet, the Greens and some in the Government are calling for an inquiry into electricity prices, where energy bosses will cop the same grilling as banking executives.
It is a suggestion dismissed by Mr Collette as unnecessary, given the number of other current inquiries into the sector.