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Roadmap to Uncertainty

The New South Wales (NSW) Government has released its energy roadmap. Following this, some major players in the energy market have reassessed their position.

AGL had planned to build gas powered generation close to Newcastle, 117kms north of Sydney and to build a big battery on the Liddell power station site, located between Singleton and Muswellbrook in the Upper Hun

ter Valley of NSW. These now appear to be shelved due to fear, rather than certainty within the industry, that the NSW Government’s energy roadmap is causing. The biggest concern from industry is that the roadmap will distort the market.

AGL has recently signed equipment supply contracts with key suppliers to accelerate the development of the 250MW Gas turbine to be built near Tomago. These contracts are now at risk as a final investment decision on the Gas turbine development has now been paused. The development of the big battery at the Liddell site will also be reviewed.

It is not just energy giants and developers that have raised their concerns over the NSW Government’s energy roadmap, the Australian Energy Council have voiced worries that the NSW Government’s roadmap could distort market signals for private investments in the generation sector.

For some observers, the roadmap is seen as the latest government intervention to delay commitments by private energy suppliers in new fast-start gas-fired power generation. This follows several interventions at federal level, including pushing ahead with Snowy 2.0 and the “big stick” to force divestment.

The road map is seen as a positive step by renewable developers, as the plan effectively underwrites individual projects and through its planning function, the government also effectively sets a floor price for renewables projects.

AGL is not the only company to put projects on hold. Energy Australia has also delayed a final investment decision on its $300 million Tallawarra B gas-fired power project in the Shoalhaven region.