The Federal Government announced this week that they will step into the electricity market (through the state-owned Snowy Hydro) to build up to 1,000MW of gas-fired generation to fill the gap left by the Liddell Power station for the 2023-24 summer unless the market can demonstrate final investment on dispatchable power by 2021.
It comes at a time when
- AEMO announced in the ISP that no new gas is needed for the NEM
- AEMO electricity statement of opportunity suggests that only 154MW of capacity is needed – this is to meet the more strict interim reliability standard (which is 3x more stringent than the actual reliability standard)
- Rough capital cost for an OCGT would be $1,250/kW which is more than the cost of battery storage
- Total rough short-run margin cost for new GPG to $81-$87/MWh
- Fuel cost to run a gas-powered generator would be >$75-80/MWh given future gas projections recovering to $6.50/GJ by next year (plus $1/GJ for transport)
- Variable O&M cost is ~$6-$7/MWh