AGL holds off on 1000MW gas-fired power station

This may be a win for the solar and renewables industry or it may be seen as a setback for the Australian economy and carbon tax.

Australia’s largest gas-fired power station project has been placed on the back burner due to the weak demand and uncertain state price regulation. AGL Energy’s $1 billion Dalton project was approved by both the state and federal government for development in Yass located in NSW‘s southern tablelands. The decision to suspend the 1000 megawatt power station comes just days after it was revealed that Energy Australia, the former TruEnergy, would cut back the coal-fired power station near the NSW boarder in Yallourn. Victoria’s Latrobe Valley power station was also scaling back its operations because of the carbon tax, low prices and weak demand.

Climate Change Minister Greg Combet said the Yallourn closure was evidence the carbon tax was working.

The shelving of the Dalton project is in addition to the 3000 megawatts of coal-fired power generation that has been scaling back or closed recently.

The decision did not come lightly however key factors included weak demand as well as rising domestic gas prices.  Unusual considering that the carbon tax is supposed to inspire these types of projects.

It is expected that the same fate will fall on similar gas fired power plant projects set to be developed throughout the country.

“The economic viability of this project has been under review fort several months because of market conditions.”  AGL spokesperson said.

It said that it had now suspended the first, 500MW stage of the gas-fired power station.  This came as a shock as it was only August when AGL said it was continuing to look at Dalton as a way to support its growing customer base in NSW.

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Construction had not yet commenced however it was projected that AGL was going to give the go ahead this quarter.  Perhaps the set back is due to the release of NSW government ‘s drafted framework for electricity prices from 2013-2014 to 2015-2016, which indicated that price tariffs would fall.

The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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