Hunter Valley group plans to re-open Australia’s “dirtiest” coal generator

The new owners of a mothballed coal generator near Singleton in the Hunter Valley plan to restart operations at the 150MW facility, in what would be the first reversal of a coal closure in Australia amid a widening political divide over climate and energy.

The Redbank coal facility near Singleton was closed in 2014 after being put into administration following the failure of Babcock & Brown.

The plant had opened little more than a decade earlier, hailed as a “cutting edge” technology because it used mine waste, but criticised by environmentalists as one of the most polluting. At the time of its closure, it was considered to be the dirtiest power station in Australia.

Now Hunter Energy – headed by James Myatt, a former head of the Australian offshoot of US solar company Sungevity, and a co-founder (with ARENA boss Darren Miller) of upstart retailer Mojo Power – wants to re-open the plant and hopes to do so in early 2020.

Hunter Energy is believed to have also put in a proposal to the federal government’s underwriting scheme for new generation, one of ten coal projects submitted to the government, and could  emerge on a shortlist of candidates that will be unveiled before the government goes into caretaker mode in a few weeks.

Redbank sourced its fuel from tailings from third party coal mines. Because it used “mine waste” from elsewhere it had been branded as a “cutting edge” technology, but was criticised by environmentalists for actually being more polluting.

Its emissions intensity was rated by the Australian Energy Market Operator at 1.4 kg of Co2 equivalent per kilowatt hour – the worst of any black coal generator in Australia at the time, and more than the current dirtiest power station in the country, the Yallourn brown coal facility in Victoria (1.3kg/kWh).

Redbank was shuttered in 2014, despite pocketing a $9 million hand-out from the federal government Energy Security Fund under the then Labor government’s carbon pricing scheme.

It was then sold to a company that was looking at biomass operations. The new owners, which bought the plant last September, however, want to revive the coal generator itself as part of a plan for an “energy transition” park.

This month, the company advertised for a portfolio and contracts manager, based in Sydney, whose role would be to source counter parties and negotiation of key power purchase agreements, and set the wholesale energy trading and marketing strategy.

The ad says that Hunter Energy is looking to return Redbank into service by 2020, and that the company has indicated plans to add gas generation, and possibly solar and battery storage.

News reports last year suggested that “blockchain” technology could also be added to simplify “behind the meter” transactions, but according to one of the company’s backer’s, Richard Poole, that idea has been ditched.

Poole became a centre of attention in the NSW Independent Commission Against Corruption Operation Jasper inquiry, which found he and others acted corruptly by concealing the Obeid family’s interest in a Hunter coal area.

“The return of Redbank into service is part of the broader strategy of Hunter Energy to build a transitional energy park at the Redbank site,” the ad says.

Hunter’s website says Redbank is the first of a series of planned purchases of existing generation assets, particularly those that can meet the requirements for supporting the security of supply and with a focus on using fuel sources that provide a secondary benefit of using waste or non reusable products.

These include coal tailings such as those used at Redbank, waste mine gases, waste wood products and refuse waste.

“Hunter Energy will then integrate renewable energy such as grid solar and dispatchable technology such as grid batteries into its portfolio as the electricity transition continues,” the website says.

When appointed to head Sungevity in Australia in 2014, Myatt said: “I was drawn to Sungevity after recognising that clean energy was both a necessary and unstoppable evolution of the energy industry.

“My advice to my traditional energy retail colleagues – if you can’t beat them, join them! Why fight what saves money for consumers and makes sense for the planet?”

Now Myatt, also the co-founder of Australia Power and Gas that was sold to AGL, and who has regrouped some of his partners in that venture, describes re-opening Redbank as a “pragmatic” solution to energy market issues.

He told RenewEconomy that Hunter Energy would look to reduce emissions at the plant by incorporating a solar plant (up to 30MW or 40MW) and a large battery.

“NSW doesn’t have one,” he said.

Myatt insisted that emissions from the coal plant would not be additional, because it would replace part of the Liddell coal generator that is due to close in 2022.

“There is a need in the market for baseload power,” he told RenewEconomy. “The market is totally underestimating the need for base-load power, we need a practical solution rather than a philosophical one.”

Myatt said Hunter Energy had a “broad” shareholder base of mostly former energy market people, including Poole. He admitted to “having some conversations” about the federal government’s underwriting scheme, but said the key for this project was the level of wholesale energy prices.

The biggest asset, he said, was the connection to the grid. No further permitting was required, he added.

“We are firming up our plans – our goal is to significantly reduce the emissions intensity of the site longer term.

“We are looking at biomass integration, we are looking at a large scale battery on site. The emissions wouldn’t be zero, but with biomass and renewables we could get to around half of what it is.

“I wouldn’t see it as more carbon, it is less carbon. The challenge of baseload doesn’t go away, as much as you might want to bury your head in the sand. it is not incremental carbon coming into the market.”