Second power plant on way for Tallawarra

Sydney Morning Herald
15 January 2011, Page: 5

THE chances of a power shortfall in NSW are set recede further with Hong Kong-backed TRUEnergy receiving the green light to build a second power station at Tallawarra, Wollongong, of up to 450MWs. The state government gave planning approval yesterday for the second-stage expansion of the station to proceed. TRUEnergy, the local unit of China Light and Power, is yet to make a final decision on the parameters of the plant.

It is studying either a 400MW combined-cycle gas-fired power station costing $330 million, or two or three 150MW units totalling 300MW-450MW of an open-cycle gas-fired station costing a more modest $200 million.

A combined-cycle unit is cheaper to operate and is typically used for extensive periods as either a baseload or intermediate load power station. An open-cycle unit is cheaper to build but more expensive to operate and is used as a "peaking" power station, to take advantage of surges in wholesale electricity prices.

Given the location, it is more likely that a combined-cycle station will be developed. TRUEnergy already operates the 400MW combined-cycle Tallawarra A unit on the site, which previously hosted a coal-fired power station.

"A final investment decision on the timing for a new power station development and the type of development will depend on a number of factors, including a study into the future electricity demand of our customers and the energy market in NSW, and policy settings such as any carbon price signal", TRUEnergy's director operations and construction, Michael Hutchinson, said.

Last month, TRUEnergy agreed to pay an estimated $1.5 billion for the largest electricity retailer in NSW, EnergyAustralia, and $500 million for the right to output from two power stations near Lithgow operated by Delta Energy, the Wallerawang power station and Mount Piper power station, as well as buying sites for power stations at Mount Piper and Marulan, south-west of Sydney.

TRUEnergy is planning to raise funds locally by listing on the stock exchange, although the timing and the amount to be raised are unclear. It needs to pay $2 billion to the NSW government on March 1 for the acquisitions, and is committed to investing up to another $330 million for the Tallawarra expansion. The increased role of wind power in the national electricity market is boosting demand for peaker units, which supply power when wind units are becalmed.

Tallawarra sources its gas via the eastern gas pipeline, owned and operated by Singapore Power's local unit, Jemena. The pipeline capacity was raised last year to 98 petajoules annually, and planning for a rise to 121 petajoules is under way. Last year, the Australian Energy Market Operator forecast NSW faced shortages by 2016/17 without additional generation capacity. It would take about three years to build the Tallawarra B station.