The Federal Government has set a target for the electricity sector to deliver 1,000 megawatts (MW) of new dispatchable energy to replace the Liddell Power Station in Muswellbrook, New South Wales (NSW), before it closes down in 2023.

The Government has announced it plans to back a new gas power plant in the Hunter Valley if the sector doesn’t replace Liddell’s capacity.

The Liddell Taskforce found closing the plant without adequate dispatchable replacement capacity risks prices rising by around 30 per cent over two years, or $20 per megawatt-hour (MWH) to $80 in 2024 and up to $105 per MWH by 2030.

Prime Minister Scott Morrison  said the potential price increases would represent a huge hit to families, businesses and job-creating industries in NSW if the energy generated by Liddell wasn’t replaced.

“We won’t risk the affordability and reliability of the NSW energy system and will step in unless the industry steps up.”

The Government is giving the private sector until the end of April 2021 to reach final investment decisions on 1000 MW of dispatchable capacity, with a commitment for generation in time for summer 2023-24.

However, if by the end of April 2021, the private sector has not delivered on the target, the Government will take necessary steps to ensure the required dispatchable capacity is built.

To this end, Snowy Hydro Limited is developing options to build a gas generator in the Hunter Valley at Kurri Kurri.

Minister for Energy and Emissions Reduction Angus Taylor noted that since 2010, investment in dispatchable capacity had ‘slowed to a trickle’, with only around 1.6 Gigawatts of new dispatchable capacity connected in the national electricity market.

“The Government has always been clear – we need to see life extension or like-for-like replacement of Liddell,” Minister Taylor said.

“Over the last decade, the private sector has not built a single new reliable power plant in NSW.”

“And in the five years since the closure of Liddell was first announced, the private sector has only committed to a single dispatchable generation expansion – a 100MW addition to the existing Bayswater plant. This falls far short of what is required.”

“The Government expects industry to step up and deliver the new dispatchable capacity required to ensure a reliable and affordable energy system.”