Power baron Trevor St Baker warns the Coalition not to be a ‘government of inaction’ on energy

The outspoken power baron Trevor St Baker has urged the Coalition to avoid being a “government of inaction” on energy policy and called for the Liddell power station to be transformed into an “exclusive baseload power precinct”.

It comes as companies that were shortlisted for taxpayer underwriting for energy generation projects before the May election continue to wait for information about how the program will work or whether they will receive government support.

St Baker has two power generation projects on the shortlist of 12 unveiled in March, including a pumped hydro project in South Australia and a coal upgrade at Lake Macquarie being pursued by his company, Delta Energy.

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He said the underwriting process was “a slow process” because “there are bureaucrats working out the order of things”.

Speaking on condition of anonymity, some other energy company managers with projects on the shortlist expressed frustration that they did not yet know how many the government planned to support, how those projects would be selected or what form of support the underwriting would take.

They said they believed the program had been announced ahead of the election without key decisions having been made before about how it would work on the assumption the Coalition was unlikely to win and the policy would not go ahead.

Tony Wood, the energy program director at the Grattan Institute, said he understood the government was struggling to turn what had been a pre-election thought bubble into reality.

He said the plan for the program now appeared quite different to the recommendation by the Australian Competition and Consumer Commission, which suggested the government provide certainty for debt financing to help new companies that already had deals with customers enter the market.

The energy minister, Angus Taylor, said work on the underwriting program was progressing. He said the shortlist had identified projects at different stages of maturity that were designed to increase competition and supply and put downward pressure on prices.

He said a recent announcement that the government would spend $40m on grants for pumped hydro energy storage projects had been made to support the first underwriting projects in South Australia. Three of the 12 shortlisted projects were pumped hydro in that state.

“Further announcements will be made as the Commonwealth reaches agreements on support for individual projects,” Taylor said.

The government is working on the policy mechanism that will underpin both the shortlisted projects and new generation capacity beyond the shortlist later this year. Officials say, when it comes to the shortlist, the government has prioritised projects nearing the financing phase.

Wood said the underwriting program could work against the government’s goals of ensuring there was enough dispatchable electricity and helping cut power bills. Major generators were less likely to invest in new power plants while the government was underwriting their competitors and the underwritten projects were likely to end up competing with the commonwealth-funded Snowy Hydro 2.0 project.

“It’s not just a bad idea, it’s worse than that, because it undermines the reliability obligation and the market signal encouraging new investment,” he said. “I think Angus Taylor is genuinely concerned but I don’t think this is going to solve his problem. It risks a future where people will not invest without government underwriting.”

The Australian Industry Group last year said underwriting could leave taxpayers exposed to liabilities “with a net present value of billions of dollars”.

St Baker said the shortlisted projects he was pursuing would make a contribution to Australia’s energy needs but the main game was a replacement for Liddell in New South Wales and additional baseload capacity in Victoria.

He said he wished the governments in NSW and Canberra “would work out either extending Liddell or selling it to someone who will extend it until a replacement can be built”. He said he was “biding time to see whether we’ve got a government of action or a government of inaction”.

“I think making Liddell an exclusive baseload power precinct and paying all the existing generators for spinning reserve that they’ve never been paid for could give AGL or any purchaser of Liddell a better business case to keep it going for as long as it can keep going, and not retiring it until it is replaced by a like for like baseload plant providing 24/7 power,” he said.