Queensland looks to gas and coal, hedges bets on nuclear as new cost blowout emerges for pumped hydro

The new Queensland state LNP government has signalled it will follow its $1.4 billion funding pledge for coal with a boost in gas generation, and has kept the door open for nuclear as it reveals yet another cost blow out for one of the state’s signature pumped hydro projects.

Davud Jantzki, who doubles as treasurer and energy minister, this week delivered his first major speech, where he said more investment in gas was needed. Last week he unveiled a $1.4 billion funding program to ensure the state’s coal generators are properly maintained.

Queensland is the country’s most coal dependent state, with a share of around 66 per cent of generation, and while the new government has vowed to scrap Labor’s renewable energy targets, already committed investment should propel the state to more than 50 per cent renewables by 2030.

Janetzki said, however, that more investment in gas is needed, even as the coal plants stay on line, and continued to hedge his bets on nuclear, confirming his election night comments that suggest he is a supporter of the technology, despite premier David Crisafulli repeatedly ruling it out.

Meanwhile, the future of the second major pumped hydro project is in doubt after new costings for the 2GW/48GWh Borumba project suggests its budget has blown out by $4 billion to more than $18 billion.

The LP government has already scrapped the bigger Pioneer Burdekin pumped hydro project, after its costs to blow out to more than $30 billion, although analysts have said the state government’s costings revealed that a more modest option would deliver significant benefits to consumers.

A meeting was due to be held this week between Janetzski and Queensland Hydro on the fate of Borumba, but it is not clear what, if anything, has been decided.

The Queensland Hydro report shows, according to Janetzski, that the Borumba project was also three years behind schedule and would not be finished by 2030 as planned.

The report found that there was in fact less than a 1 per cent chance of meeting this timetable. The analysis showed that the former Labor government had built in “unrealistic assumptions” when scoping the time and cost of the project.

The report instead expects a risk-adjusted final completion date to be closer to between November 2032 to July 2035.

“Labor’s energy policy was a house of cards waiting to collapse,” said Janetzki. “Queensland Hydro’s report showed there was less than a 1% chance of the Borumba Pumped Hydro project being completed on time.

“The Government will deliver an energy policy guided by engineering and economics, not ideology. Our energy policy will always be grounded in reality on cost, timeframes, and delivery.” Which, apparently, does not mean ruling out nuclear.