18 Mar 2021

A statement on the Port Kembla Power Station project

Australian Industrial Power (AIP), an entity within the Squadron Energy group of companies is aiming to develop a dual-fuel (gas and green hydrogen) power station at Port Kembla, New South Wales. Below is a summary of our existing plans and intentions.

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Lined up

The project will utilise natural gas from the new Port Kembla Gas Terminal (PKGT) once complete to generate power for the National Electricity Market. This means it will not be consuming any of the existing and dwindling supplies of natural gas in NSW.

The project is being configured for the future decarbonisation of the electricity grid with the capability of operating on 30-35% green hydrogen by volume from its first commissioning, with a development pathway for operation on 100% green hydrogen by 2030.

The Port Kembla Power Station will be a high efficiency combined cycle unit with a peak capacity of 660MW (635MW nominal) into the grid and will deliver a new source of large-scale dispatchable, safe, reliable and lower emission electricity to support the growth in renewable energy.

The project was shortlisted under the Commonwealth Underwriting New Generation Investment (UNGI) scheme. The UNGI program was established to support firm generation capacity and increase competition as part of the Australian Government’s commitment to lowering electricity prices and increasing reliability in the system. AIP has been working collaboratively with the Commonwealth to agree commercial terms of the UNGI agreement that will allow the project to proceed.

The terms of the UNGI agreement, whilst not yet final, will mean the project will be funded by a combination of equity from AIP and bank debt, underwritten by the Commonwealth.

Subject to execution of formal project documentation, timely planning, environmental and grid connection approvals, the project could be constructed and be able to supply electricity directly to NSW customers during 2024.

Project Benefits

The project aims to:

  • provide a secure source of large-scale mid-merit electricity, thus supporting the more rapid development of renewable electricity;
  • put downward pressure on wholesale and retail electricity prices in keeping with the energy policy of Federal and State Government;
  • provide additional low emission choices to the market;
  • introduce new competitive forces (price and term of contract) in the electricity supply;
  • establish NSW’s first-ever mid-merit hydrogen capable power station;
  • provide a potential large-scale off-take for local green hydrogen supplies;
  • contribute to the investment attractiveness, workforce diversification and skills-base of the Wollongong area;
  • inject ~$1200million capital investment into the economy; and
  • create 600 -700 (est.) construction jobs and 25 – 35 (est) on- going jobs.

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