New taxpayer-funded gas plant would increase electricity prices, energy analysts warn

A plan to put taxpayers on the hook for a new gas power station has come under fire.

A plan to put taxpayers on the hook for a new gas power station has come under fire. Photo: Getty/TND

Building a taxpayer-funded gas power station will do nothing but drive up electricity prices and is the “equivalent of investing in landline phones when you have mobiles”.

That is the message from energy analysts and industry experts following reports that the federal government is considering building a gas plant in the Hunter.

“We are bankrolling [the plant],” Australia Institute climate change and energy director Richie Merzian told The New Daily.

“We will pay to build it and for the impact on electricity prices.”

First touted last year, the Morrison government is expected to build the new plant at Kurri Kurri after giving private companies a deadline of April 30 to propose alternatives.

The federal government originally asked the three major players in Australia’s energy market to build it, but both EnergyAustralia and AGL put their plans on hold after the NSW government announced its energy roadmap, which focuses heavily on renewables.

EnergyAustralia is expected to announce a new gas and hydrogen plant near Wollongong after Energy Minister Angus Taylor put pressure on companies to do so late last year, as part of his gas-fired recovery plan.

Gas could gouge households

The planned $600 million taxpayer-funded gas plant is meant to fill the gap in the market left by the coal-fired Liddell Power Station, due to close in 2023, and Prime Minister Scott Morrison has claimed it will cut electricity prices by 30 per cent.

But Mr Merzian said it will actually do the opposite, as gas is expensive and we already have more than we use.

“Snowy Hydro is a public company, if they lose money on this we lose money on this,” he said.

“If they have to recoup money because it’s a dud investment they’ll charge more for the asset they do own.  And they own a lot of electricity assets.”

The government’s gas plan has been criticised for the lack of jobs it contributes, the likelihood that electricity prices will rise, and the fact  that gas is a fossil fuel – so will add to Australia’s role in driving climate change.

“We do not have the luxury of time to play footsies with another fossil fuel,” Mr Merzian said.

‘Threat’ to the grid

On Friday, Australia’s Energy Security Board (ESB), which acts as the nation’s energy advisor, decreed the writing is on the wall for coal, calling for a nationally coordinated approach to deal with threats to the grid’s reliability as coal plants shut down.

“The rapid spread of large-scale wind and solar, along with rooftop PV, across Australia, means our energy system is experiencing the fastest and most substantial change in the world,” ESB independent chair Kerry Schott said.

“We are preparing the advice ministers need to enable the critical decisions needed for an affordable, reliable and secure electricity system that can ultimately operate at net zero emissions.”

Climate Council senior researcher Tim Baxter said the indication from the ESB that New South Wales does not need a new gas project to meet its future energy needs showed the state’s renewable plan would be sufficient to fill the gap.

“Renewables are the cheaper, smarter choice to meet future energy demand. Meanwhile, gas is expensive, polluting, and worsens climate change,” Mr Baxter said.

“As one of the sunniest and windiest countries in the world, we should be investing in renewable energy technologies that deliver win-win-win outcomes for electricity prices, energy supply, and job creation.”

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