Delta Electricity, a potential buyer, says either AGL or the commonwealth will have to take on costs of eventual rehabilitation

Extending the life of the Liddell coal-fired power station beyond 2022 could require the government to stump up the almost $1bn cost of rehabilitation after just five years of operation, according to the only Australian company that has declared an interest in buying the station.

Delta Electricity also says the biggest barrier to any such purchase is the government’s lack of commitment to a climate-energy policy such as the clean energy target.



Liddell, Australia’s oldest operating coal-fired power station, is now owned by AGL. It is due to close in 2022, taking out about 12.3% of capacity in New South Wales and reducing the reliability of electricity supply.

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AGL’s rehabilitation report from June estimates that decommissioning Liddell and returning the land to near pre-development condition would cost about $510m in 2017 dollars, or $898m taking inflation into account over the rehabilitation period, which could be more than a decade.

The Australian Energy Market Operator has said Australia needs “new approaches” to ensure there is enough dispatchable electricity, but the Coalition has instead been seeking to keep Liddell open beyond its intended life of 50 years.

AGL has said it is not willing to do that, but has not completely ruled out selling the plant – and government ministers have said AGL’s chief executive, Andy Vesey, has committed to considering its sale.

But Delta says it would not be able to cover the cost of rehabilitating the site when the plant does eventually close.

“These are not small numbers. And would we take on a project for five years that came with a $500m liability and the answer is no,” the company secretary of Delta Electricity, Steve Gurney, told the Guardian. “You’d never recoup that liability in five years.”

Gurney said Delta would either need AGL to pay it upfront, or the commonwealth would have to take on the liability.

“There are questions of whether the commonwealth would step in – they want it kept open. Would they step in and meet that rehab [cost]?” Gurney said.

“So you’d then be talking about some sort of guarantee – or even an upfront payment from AGL. In other words you pay us that 500m, or net present value of that 500m now, and we’ll take on that liability.

“Or we’ll take it on for the extra five years but we will hand it back to AGL.”

On Friday, the opposition leader, Bill Shorten, renewed his calls for the creation of a clean energy target to give policy certainty to business.

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He called for an end to the “climate change wars” and offered to work with the government on establishing a target.

“The reason why the clean energy target is an important first step is that anyone who knows anything about energy prices – and the fact is, they’re out of control – says that it is the absence of a clear set of rules which is discouraging businesses from investing,” Shorten said.

“If business doesn’t invest in new forms of energy generation, what happens is that we’ve got less and less energy generation. So the real first thing to do is to get a common set of rules to make sure that we have a proper energy market.”

Gurney aired similar concerns. He said even approaching the question of buying power generation in Australia was made difficult by lack of policy action.



“I’m happy to say this on record,” Gurney said. “The biggest problem for – I’m not going to say just coal-fired, but the electricity sector – is government policy both at the state level and the federal level.

“For most of these projects – whether you’re talking new coal-fired, or refurbing existing coal-fireds to keep them going a bit longer, or new renewables – these are not cheap $5 jobs, they are hundreds of millions.

“As long as you have this flip-flop happening and uncertainty into the future, it’s very hard.”



In making a decision on whether Liddell had an economic life beyond 2022, “having at least a consistent firm bipartisan approached energy policy at least lets everyone make their assessments”, Gurney said. “At the moment everyone is flying in the dark.”

He said the key issue was getting some policy on the table, even if wasn’t Delta’s preferred one.

“Whichever the mechanism is, at least then we have certainty. Whether it’s the best one for us or not – at least we can then go forward and plan for the future knowing what that mechanism is.”

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AGL said it wasn’t willing to comment much on the matter before a meeting with Malcolm Turnbull on Monday.

“We understand the importance of this issue and it’s right the government is focused on it. Therefore we will have that direct conversation on Monday and will come back to you with details after that,” an AGL spokeswoman said.



The treasurer, Scott Morrison, said on Friday that it was necessary to keep the Liddell plant open to put downward pressure on prices and secure supply over the mid- to long-term.

Morrison accused Shorten of selling out workers in the Hunter through his position on coal.

“They’ve put up the white flag on coal-fired power in the Hunter Valley and they’re selling them out,” he said.

Shorten again called for the triggering of gas export controls, to force prices lower.

“It is a joke that you can buy Australian gas cheaper in Japan than you can buy it in Australia,” he said.