Eutility's weekly news

Alinta Energy CEO sees $170m coal power upgrade as a safe bet

Alinta Energy CEO sees $170m coal power upgrade as a safe bet

Alinta Energy is forging ahead with a $170 million refurbishment of the utility's coal power generator in Victoria as well as investing in new renewables as chief executive Jeff Dimery said industry needs to quit hoping for bipartisan support on all key aspects of energy policy and "just get on with things".

The upgrade of the Loy Yang B power station is intended to set up the Latrobe Valley plant for reliable operation for another 20 years and will also increase capacity by 5 per cent, Mr Dimery said. He predicted that even under a Labor government coal power generation will remain in the mix for some time to avoid a "dislocation" in the market and ensure affordable and reliable electricity supply.

"I think there have been valuable lessons learnt from what happened in South Australia in both sides of government," he said in an interview.

"I don't think it matters which party is in government; there will continue to be a strong reliance on coal-fired generation for several years to come."

He was speaking not long after separate discussions in Canberra with new federal Energy Minister Angus Taylor and his shadow, Mark Butler, in the wake of the "disappointing" collapse of the National Energy Guarantee policy in the dying days of the Turnbull government.

"The one thing that's become clearer for me is that both parties are absolutely committed to affordable and reliable energy and the thing that really differs is how quickly they get there in terms of emissions reduction."

Mr Dimery said the move to lower carbon energy supply was happening anyway as cost reductions and advances in technology drove investment in wind and solar.

"Whether that becomes government policy or not, that's the direction the whole market is heading in when it comes to investment," he said.

"It really boils down to how quickly and whether governments want to force that issue by having conducive policy to fast-track or just let it happen more naturally."

Alinta, owned by private Chinese conglomerate Chow Tai Fook Enterprises, bought the 1000-megawatt, brown coal-fired Loy Yang B plant for about $1.2 billion in January to beef up access to low-cost power in support of an aggressive push to add new customers on the east coast.

It has been adding 2000-2500 customers a day as it poaches accounts, mostly from larger rivals such as AGL Energy, Origin Energy and EnergyAustralia.

Mr Dimery said the recommendations from the Australian Competition and Consumer Commission to help tackle power prices that have been taken up by the federal government "might as well be policy as far as I'm concerned" as they were also supported by Labor.

They include the setting of default retail prices to replace more expensive standing offers to enable customers to compare supply deals more easily, and government underwriting of long-term power purchase contracts to support the construction of new generators that can produce power for industrial customers.

Mr Dimery said Alinta would explore such a government arrangement for its 300 MW Reeves Plains gas-fired power project in South Australia after failing to get enough support from customers to reduce the risks of the investment.

"We would certainly be interested to look at whether or not there is a role for Alinta to play in bringing on gas-fired generation in South Australia through those sorts of arrangements," he said. "There's no doubt that derisking any project enhances the commercial attractiveness for sure."

Alinta also remains on the looking for more generation assets "at the right price", although its offer for AGL Energy's Liddell plant was knocked back in May under then CEO Andy Vesey.

"I haven't had any phone calls from Brett," Mr Dimery said, signalling no change of stance by AGL under interim CEO Brett Redman.

Alinta has also been sniffing around the 50 per cent of NSW coal generator Vales Point that coal entrepreneur Brian Flannery is looking to sell but Mr Dimery said his company had not been invited into that bidding process.

"We remain open to discuss an opportunity if and when the current owners want to talk to us."

Alinta is also thought to be looking at the Smithfield gas-fired power station in western Sydney that packaging giant Visy has on the market.

"We remain interested in building our portfolio," Mr Dimery said. "We can't overpay for assets or we can't deliver. But at the right price we're very interested."

Financial Review

Post a comment

Captcha Image