The NSW government has sold the last coal-fired generator in its portfolio to two private investors – gaining the princely sum of just $1 million. But at least that’s $1 million more than it got last year for the sale of the Liddell coal generator in the Hunter valley, which it essentially gave away for free.
The 52 year-old, 1,320MW Vales Point power station, located on the shores of Lake Macquarie north of Sydney, was sold to energy consultant Trevor St Baker, who is also founder and deputy chairman of power company ERM, and coal miner Brian Flannery.
Last year, AGL Energy bought Macquarie Generation from the NSW government for $1.55 billion. It comprised the Bawswater and Liddell power generators, totalling around 4.6GW. AGL said the 2,000MW Liddell facility was included effectively as a “free carry” because it saw all the value in Bayswater and favourable coal supply contracts.
St Baker, who now heads a company called Sunset Power – possibly an appropriate name, given the medium to long-term future of coal generation – told the AFR that he thinks he can turn the power station around.
“It’s been a loss-making business for several years. We have been involved in this business for a long time on the coal side and the power side and we intend to trade with the market in a smarter and more effective way”.
Indeed, a day later, St Baker announced a deal between Sunset and ERM for an off-take agreement that will free up $60 million of capital through a complicated series of hedges and other financial instruments. Few other details were available.
NSW Treasurer Gladys Berejiklian said the sale of Vales Point would return $130 million in cash held in the company to the government, and save the state tens of millions of dollars in decommissioning costs.
The purchase comes after Alinta Energy announced that its Northern coal plant in South Australia will close permanently in March, removing the last coal-fired generator in that state. New Zealand has also closed its last coal generator and the UK has announced that all “unabated” coal generation will close by 2025.
According to Wikipedia, Vales Point Pis recognisable in the background of the music video for the 1982 Midnight Oil track “US Forces”.
The NSW government has also announced that it will cease work on the controversial Cobbora coal mine, which was to deliver subsidised coal to NSW generators, and sell the 44,500 hectares of land for agricultural use.
“The former Labor government’s decision to develop this mine would have saddled taxpayers with a future liability of more than $1.5 billion in development costs,” state treasurer Gladys Berejiklian said.