Business

Gladstone Power Station could suffer $1.1b blow

Paul Braven

GLADSTONE'S power station is facing a new challenge in the form of the Queensland Government's renewable energy target.

For many, Gladstone Power Station's three stacks signify the reason for bringing their family here for jobs over the past 40 years but the generator may now be under threat from the Annastacia Palaszczuk State Government's 50% renewable energy target.

A draft report commissioned by the Palaszczuk Government, in its bid to have 50% of the state's energy produced renewable technologies by 2030, found the power station would be hit by a $600 million to $1.1 billion cash-flow reduction if the target was reached.

That kind of financial hit would be a further blow for the power station which already runs to about 35% capacity and with a smaller workforce than any time in its history.

"While existing generators are projected to suffer very large reductions in future profits... they are expected to be able to continue to meet their avoidable costs and provide modest returns to capital," the Queensland Renewable Energy Expert Draft Report read.

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An aerial View of the Gladstone Power Station.
An aerial View of the Gladstone Power Station. Brenda Strong

But an energy expert has said the owners of Queensland's biggest power station, most emissions intensive and oldest, as well as all the others in Queensland, would have to weigh up if the small profits would outweigh the constant infrastructure costs required to run a power station.

Grattan Institute's director of energy Tony Wood said Gladstone Power Station would have to weigh up the economics to invest in upgrades.

He used the Hazelwood Power Station, in Victoria, as an example where there was speculation it would close instead of spending $10-$20 million in repairs when the profits might not be there in 10 years to justify the investment.

POWER PERFORMANCE: The emission intensity of Australia's power stations.
POWER PERFORMANCE: The emission intensity of Australia's power stations.

Gladstone Power Station has faced similar economic decision, it went through an organisational restructuring in March due to "changing business conditions both in electricity market and the resources sector in general" as explained by then general manager John Abbott.

The were job losses and termination of its maintenance contract as terminal overhauls were reduced to match the wear and tear of the station as it ran about 35% capacity because of the current impact of renewable energy.

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There is, however, a silver lining.

If the Gladstone station could outlast other power stations, profits could increase as there would be less suppliers to meet need.

Despite all these pressures, premier Palaszczuk said coal-fired power stations would serve Queenslanders for "many many years to come".

She said the panel which created the report had shown a pathway to deliver the government's target and implored politicians to make a submission for the final report.

Gladstone member Glenn Butcher said his concern was for the workers but said the renewable energy transition wouldn't happen with a click of the finger.

"Renewable energy will continue to grow and there could be opportunities for these workers to be utilised in the renewable energy sector if that work is viable for them," he said. "And we need to remember this is 14 years away.

"The power station is unique, it can ramp up immediately and who knows, it could be bought by industries which come to Gladstone and need their own energy generation."

NRG Gladstone Power Station was contacted for comment.

Topics:  gladstone gladstoneindustry gladstone region renewable energy renewable energy target


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