Federal resources minister Keith Pitt was not advised that the Kaban Energy Hub project would feature both a wind farm and big battery before he vetoed a $280 million government loan on the basis that it was not dispatchable, department officials told a Senate Estimates hearing on Friday.
Project developer Neoen approached the Northern Australia Infrastructure Facility (NAIF) to seek a $280 million loan for the Kaban Energy Hub project that will combine both a 157MW wind farm with a 100MW big battery. The project, to be built in Northern regional Queensland, is expected to support the creation of around 250 jobs during its construction phase.
The NAIF had supported the provision of the loan to Neoen, with the board of the NAIF recommending to resources minister Keith Pitt that he approve the loan.
However, Pitt subsequently used his ministerial powers to veto the loan, writing to the CEO of the NAIF, Chris Wade, in March to say that he did not consider the project was consistent with Morrison government policy and that he did not support the project because it was not dispatchable.
Pitt, the NAIF and the Department of Industry, Science, Energy and Resources have all contended that the proposal submitted by Neoen seeking the loan only included the wind farm component and did not mention plans for a battery.
But this position was questioned by Labor Senator Murray Watt, who asked why – if due diligence had been conducted – that officials were not aware that the project included a battery, even if it wasn’t cited in the loan application.
NAIF CEO Chris Wade told Senate Estimates on Friday that because Neoen had not mentioned the battery in its proposal, it was not mentioned in the recommendation submitted to Pitt for approval, despite details of the battery featuring in several public announcements and the project’s website.
“I think it’s been publicly said by the Minister that it didn’t include a battery, and I can confirm that fact of the proposal that we were provided from Neoen and that it did not include a battery,” Wade said.
Media statements about the project, some dating back as far as May 2019, show that a battery component had always been planned to be a part of the Kaban Energy Hub, as well as the project’s website prominently including details about the planned battery.
After being pressed by Watt, Labor’s shadow minister for Northern Australia, department officials told senate estimates on Friday that the department had also never advised Pitt about the battery component.
“Did this department ever advise minister Pitt whether, in writing or verbally, or his office, that this project included a battery? Did you ever advise him about that?” Watt asked department officials.
“No. Our advice never indicated there was a battery involved,” department deputy secretary Jo Evans told the estimates hearing. “Because we were basing our advice on the material we had received from the NAIF where the proposal did not include a battery. ”
It suggests officials within the department did not advise Pitt that the project would include a battery because it wasn’t mentioned in the NAIF’s brief.
This is despite all of the publicly available information that mentioned the planned battery that would have almost certainly been considered as part of a due diligence process undertaken by the NAIF.
Pitt cited the lack of dispatchability of the Kaban Energy Hub component as the basis for vetoing the NAIF loan – presumably because he was never advised about the battery.
Having used his ministerial powers to veto the loan that had been recommended by the NAIF board, Pitt will be required to table a ‘statement of reasons’ for the veto in parliament, which has yet to occur.
Ultimately, even if the battery had been included in the proposal, it still may not have changed Pitt’s mind, with the resources minister delivering a train wreck interview shortly after the loan veto became known publicly, where Pitt refused to acknowledge that batteries are dispatchable.
The Queensland state government has stepped in to support the project, agreeing to make a $40 million investment in new network infrastructure upgrades. The Queensland government-owned CleanCo has also entered into an agreement to purchase 50 per cent of the project’s output.
Construction of the project commenced in May, following confirmation of the Queensland government’s support.
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