SA power plant plan faces axe

Adelaide Advertiser
Saturday 9/8/2008 Page: 46

A $350 MILLION power station planned to ease stress on the state's electricity network in peak periods is at risk of being scrapped. The Advertiser has learned the proposed 450 megawatt gas-fired peaking power station near Mallala, north of Adelaide, has been put on hold until more is known about the Federal Government emissions trading scheme.

Babcock and Brown Power, the financial backer of the project, also is reeling from bad debts and has sold equity in three power stations in the past month. The Mallala power station, which received Development Assessment Commission approval last year, would be SA's second largest after Torrens Island's 800MW generator. In an emailed statement to The Advertiser, the company stated: "Any final decision (on the Mallala power station) is dependent on - and part of - Babcock and Brown Power's broader evaluation of the emission trading scheme."

It said preliminary work was continuing "... although there are no specific end dates associated with the plan which focuses on a 12-to-18-month time frame." The company on July 4 announced it had sold its Uranquinty Power Station in NSW to Origin Energy for $700 million. Two weeks later, it sold 73 per cent of its equity interest in the Newport and Jeeralang Power Stations in Victoria for $87 million.

In the past 12 months, Babcock and Brown Power's share price has dropped from $3.24 to 67.5c. The company also owns power stations in Port Augusta and Leigh Creek. Construction of the Mallala station was originally to start in July last year on 10ha of land, about 55km north of Adelaide. The project would be carried out in three stages with each stage capable of producing 150MW of power. On average, SA uses 1400MW each day. That can double in peak times.

The station is described as "peaking" as it only would operate at times of peak demand. It would use open-cycle gas turbine engines, fuelled by natural gas, supplied through the Moomba-to- Adelaide pipeline which intersects the development site. The Federal Government's Carbon Pollution Reduction Scheme, due to start in 2010, aims to minimise greenhouse gas emissions and limit the carbon pollution industry emits.