Last updated 29 March, 2019

The Australian Government has announced the 12 projects that will receive funding under the Underwriting New Generation Investments (UNGI) program, a key part of the Australian Government’s plan to deliver affordable and reliable power.

The UNGI program’s Registration of Interest process received a strong response, with 66 proposals submitted across a range of generation types and states in the National Electricity Market.

The government has carefully considered the 66 proposals submitted against the program’s guidelines and has agreed to a shortlist of 12 projects – six renewable pumped hydro projects, five gas projects and one coal upgrade project.

As recommended by the ACCC, the selection process has been technology neutral, with projects selected for the shortlist representing a range of fuel types.

The shortlist comprises:

Gas

  • Alinta Energy, East Gippsland, Victoria
  • Alinta Energy, Reeves Plains, South Australia
  • Quinbrook Infrastructure Partners, Gatton, QLD
  • APA Group, Dandenong, VIC
  • Australian Industrial Energy, Port Kembla, NSW

Renewable Pumped Hydro

  • Sunset Power Pty Ltd, Lincoln Gap, South Australia
  • Rise Renewables, Baroota, SA
  • UPC Renewables, Armidale, NSW
  • BE Power Solutions, Cressbrook Reservoir Crows Nest, QLD
  • Hydro Tasmania: Battery of the Nation, TAS
  • SIMEC Zen Energy, Eyre Peninsula, SA

Coal

  • Delta, Lake Macquarie, NSW  

The shortlist represents a combined capacity of 3818MW of new generation.

The emissions intensity of individual projects was considered when finalising the shortlist. The weighted (by capacity) emissions profile of the shortlist is around 0.27 t CO2-e per MWh, compared to the 2018 NEM average of 0.82 t CO2-e per MWh. This is around one third the emissions intensity of the National Electricity Market and reflects the significant new pumped hydro and low emissions gas projects included in the shortlist.

The government will continue to engage with proponents that have not made the shortlist, but meet the guidelines.

Projects that included generation types that are currently not legal in Australia (such as nuclear) were rejected, and the government decided not to pursue proposals submitted by generators/retailers that currently hold significant market share, in line with the recommendation by the ACCC.

As an objective of the Underwriting New Generations Investment program, the government will be targeting a 25 to 30 per cent reduction in wholesale prices in each NEM region by 2021.

On Tuesday 26 March, the government also announced a new program to address supply and affordability issues specifically for high energy-intensive and trade-exposed customers in North and Central Queensland.

As part of its plan for a stronger economy, the government will provide $10 million over two years for the program, which will fund a business case that will focus on short and long-term customer energy requirements, and future generation opportunities to meet customer needs.

The program will develop a detailed roadmap and identify viable locations for firm generation including coal, gas, pumped hydro, and biomass opportunities, including Collinsville and Gladstone.

The government will conduct detailed evaluation and feasibility of projects in North and Central Queensland through the UNGI program.

These projects include, but are not limited to, a new HELE coal project in Collinsville, upgrades of existing generators as well as gas and hydro projects.

In addition, the program will focus on:

  • Network infrastructure requirements
  • Energy use requirements – specifically the ability for large trade-exposed energy users to obtain long-term contracts that will allow them to remain competitive
  • Contractual mechanisms
  • Government programs, policies and support options
  • Jobs, wages and investment impacts of supporting affordable and reliable energy options

The program is targeted to deliver at least 1000-2000MW of new on-demand capacity with

wholesale costs of below $60/MWh.

The Government’s Underwriting New Generation Investments program is a direct response to Recommendation 4 of the ACCC Retail Electricity Pricing Inquiry.

The increasing supply challenges in the National Electricity Market, as witnessed in New South Wales, South Australia and Victoria in January, demonstrates the need for more generation to address significant shortfalls in the market.

Industry response

The Clean Energy Council has said that government funding for the extension of a coal-fired power plant in New South Wales would spook private investors in new clean energy generation, following the announcement of the shortlisted projects under the Morrison Government’s Underwriting New Generation Investments (UNGI) program.

Clean Energy Council Chief Executive, Kane Thornton, said the idea of potentially underwriting one of Australia’s oldest, dirtiest and inflexible power plants was clearly at odds with the objective to support more flexible generation, and the transition to a clean and smart energy system.

“Government funding for extending the life of existing coal is at odds with the original recommendation of the Australian Competition and Consumer Commission (ACCC) and simply serves to spook private investors who have backed renewable energy and storage technology to the tune of more than $20 billion over the last year alone.

“If we want to bring prices down for consumers, we need to create the conditions to encourage new private investment, not discourage them. Extending the life of an existing coal-fired generator would only makes it more difficult to mount the business case for new investment in clean energy.

“The UNGI program is rushed and lacking in transparency, and has the potential to corrode this fragile investment confidence.

“Pumped hydro is one of the lowest cost and most flexible forms of new clean generation which can underpin renewable energy. The shortlisting of half a dozen pumped hydro projects is welcome and appropriate in this context.

“A further feasibility study into new coal generation in Queensland is baffling, and an objective feasibility process should again confirm that a new coal plant in the state doesn’t make economic sense.  

“We encourage the Federal Government to focus on long-term market-based energy policy to provide investment confidence and a shift from the current trend of picking winners and distorting the energy market.”

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