The three major "gentailers", which include Origin Energy, have all rejected pressure from some politicians in Canberra to build new lower-emissions coal power plants. "New coal is a bad idea for New South Wales – coal needs to run most of the time to be economic, but the market needs flexibility, not baseload," Mr Collette said. "More baseload coal generation will likely force – prematurely – an existing baseload coal plant out of the market. It just doesn't add up for customers." He also said that a new coal power project or the extension of Liddell "would make us pause around investing in Tallawarra B". "If you extend Liddell, you pay more than you need to, you pay for a whole lot of fixed costs that are just not needed to deliver that physical outcome of peaking power, so that's why ultimately we think Tallawarra B is the best answer for all customers in NSW," he said. The Tallawarra B option was chosen ahead of building a generator of up to 700 MW at a new site in Marulan, which would have required investment in grid, gas and water connections that are already in place at the Wollongong site, which hosts EA's existing 430 MW Tallawarra generator. "It's always a little bit tougher for 'greenfield' rather than 'brownfield' and as we've worked through options Tallawarra is first in line," Mr Collette said. "We do see this is the best power development site in the state and we see it as a core part of New South Wales' future." EA is still finalising the configuration of the new plant and fielding offers from turbine suppliers, but the plant will be fast-start and run on demand. It will operate only at peak times or when other plants suffer outages, but will help prevent spikes up to the maximum $14,000 a megawatt-hour limit. "This is a really strange investment in some senses because the less it runs the better the outcome we'll have for customers," Mr Collette said. He said replacing Liddell is an issue the market can solve readily and quickly but the bigger issue remains to plan for the retirement of large coal generators in the late 2020s or early 2030s. That's where the proposed Snowy 2.0 plant, Tallawarra B and other proposed projects would have important roles to play.
Energy Australia is planning to invest $400m in a new gas power plant, despite warnings that the business case could collapse if an existing coal plant remains open, or a new one is built. The Australian government has been lobbying AGL Energy to keep open the ageing Liddell plant, which would make the plan by EnergyAustralia for the new Tallawarra B facility near Wollongong less feasible. Nevertheless, the company's head of energy, Mark Collette, has revealed they are planning a final investment decision on the plant later in 2018 or early in 2019. [copy req, Angus]