The Australian Government has announced its support for a new gas power plant in Hunter Valley, New South Wales (NSW), to replace a coal-fired power plant.

The plant would deliver 1GW of dispatchable energy, replacing Liddell power station after it closes in 2023.

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The Liddell Taskforce has concluded that the closure would otherwise lead to an increase in electricity price by nearly 30% over two years. If no back-up capacity were created, prices would rise by $14.6/MWh (A$20/MWh) in 2024, up to $58.5/MWh (A$80/MWh). In 2030, this would continue to $76.9/MWh (A$105/MWh).

Snowy Hydro will develop options for the new plant at Kurri Kurri if an alternative power generation source is not created.

Australian Prime Minister Scott Morrison said: “Affordable, reliable and secure electricity supply is critical to our JobMaker plan for households, businesses and industry. We won’t risk the affordability and reliability of the NSW energy system and will step in unless the industry steps up.

“To ensure we do not have a scenario without replacement, the government is giving the private sector until the end of April 2021 to reach final investment decisions on 1GW of dispatchable capacity, with a commitment for generation in time for summer 2023-2024.

“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.”

Morrison said that the price increases were unacceptable and would impact families, businesses and job-creating industries in NSW if the energy generated by Liddell was not replaced.

He added the federal government will work with the state governments through a programme worth up to $183m (A$250m) to fast-track three key projects, including the Marinus Link, Project Energy Connect and VNI West interconnectors.