An energy company is looking to buy an ageing power station in Victoria -- and it would be a massive favour to the Turnbull government

Liddell Power Station

Alinta Energy has been in discussions with Prime Minister Malcolm Turnbull to buy the ageing Liddell coal-fired power station in the NSW Hunter Valley from AGL.

The government has been trying to convince AGL, which is planning to close Liddell in 2022, to keep it online for an additional five years or sell the site. Energy Minister Josh Frydenberg even held talks with industry peak body Manufacturing Australia about buying the plant.

AGL plans to replace Liddell’s capacity with renewables, gas-fired power and batteries, arguing they are more cost-effective.

Independent analysis found an extension of the 45-year-old plant until 2027 would cost approximately $920 million. An assessment of AGL’s plan found the replacement generation would cost $83/MWh, compared to extending Liddell at $106/MWh.

Some Coalition backbenchers had suggested the government compulsorily acquire Liddell and run it in the interim, while others want a new coal-fired power station built.

Alinta Energy managing director Jeff Dimery told ABC Radio’s AM program that he was approached before Easter about the Chinese-owned business acquiring Liddell, and had have several discussions with Turnbull, but was not being pressured and the company was not being offered any government incentives to get a deal across the line.

“We’ve conducted some preliminary analysis which led us to an opinion that, at a commercial rate, there’s an opportunity here,” Dimery told the ABC.

If the price is right, Alinta Energy could take control in as little as four months from now.

Late last year, Alinta’s owner, Chow Tai Fook Enterprises (CTFE), signed a deal to acquire the 1,000 megawatt Loy Yang B power station in Victoria’s Latrobe Valley from French giant Engie, which last year closed the Hazelwood plant suddenly, adding to pressures about energy costs and reliability, which the federal government has made a key political issue.

Loy Yang B produces about 17% of the Victoria’s energy needs.

Dimery said how much his company was prepared to pay for Liddell “would depend on the terms and conditions of any sale” but his company has told AGL it plans to make a non-binding bid for it and extend its operations .

“We would operate the asset and maintain the asset differently than AGL,” he told the ABC.

“And the reason I say that is: if you’re running that asset to close in 2022, you’re going to operate it differently than if, for instance, we took control and looked to extend the life to 2027 to 2029.”

Dimery said Liddell still has an important role to plan until more dispatchable power, such as the Snowy 2.0 project, comes online.

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