AGL opens new Kwinana gas plant, doesn’t rule out entering WA’s household electricity market in expansion push

AGL has broken ground on a new facility in Perth’s south that promises to bolster the reliability of WA’s electricity grid — and its boss says the energy giant is open to all options as it expands in the State. The company, which entered the west in 2017 after starting out as Australia’s first gas company in Sydney way back in 1837, took the first step towards construction of a second duel-fuel power plant in Kwinana on Wednesday. It sits alongside and complements the first 120MW “peaker” power station, which starts up rapidly during periods of peak demand, offering an additional 220MW of “firming” capacity in an energy system where renewables are forming an increasing part of the mix. Chief executive and managing director Damien Nicks said both plants operated on gas and diesel, and the $490 million facility would be built as quickly as possible, with the aim of beginning operations by the end of 2027. “The great thing about these type of assets is they’re on and off in five minutes, so they run when you need them to run,” Mr Nicks told The West Australian. “They’re not sitting there running the whole time, and they’re responding to the market needs. “And if you need to, you can run them for long periods of time as well if you don’t have the sun, the wind, and all those type of things.” He said the major investment was among about $2 billion in construction projects AGL had underway around Australia as it rebuilt its portfolio, with its east coast coal assets closing by “roughly 2035”. At the sod-turning ceremony with Premier Roger Cook, Energy Minister Amber-Jade Sanderson welcomed the new firming capacity and said a decision would be made this year on whether to build a new gas-fired power station in WA as the State prepared to switch off coal by 2030. “We’re going to need to make sure that we have that system security and firming capacity in the grid,” she told reporters. “Synergy has a number of ageing gas assets, so we have to go through a responsible process of replacing those assets, and it’s likely that we will need more gas in the system as we get to 2030. “No final decision has been made around whether that is a private sector power purchase agreement or whether that’s Synergy. “But we’re doing the work internally to make sure that we have the best mix in the system. “Renewable energy is intermittent, and it comes in and out of the grid. Gas is the perfect partner ... because it can come in and out intermittently.” The new AGL facility has been designed to operate for 25 years. Shadow energy minister Steve Thomas said it was badly needed “and about three more of the same size over the next four years, or the lights will go out”. “The Government announced the energy transition in 2022, but the first four years of that seven year plan saw zero action,” Mr Thomas said. “There is now a huge catch up required, and that is the challenge facing the new Minister for Energy. “Time is running out.” Mr Nicks said power from the plant would feed into the Australian Energy Market Operator’s reserve capacity scheme in WA’s wholesale market under a 10-year arrangement. “We can operate the outside of that . . . but this just gives us something,” he said. “We’ll use this in the short term to grow in the commercial and industrial, and small-to-medium enterprises space.” And AGL isn’t ruling out pushing into WA’s household electricity market if it is ever deregulated. “If it was to deregulate, of course, we’d look to get involved in the electricity market here, like we are on the east coast,” Mr Nicks said. “We’ve got roughly 20 to 25 per cent of that market, depending on the State. “I think competition is good — it drives the right products and services — but you know, really that’s a question for Government.”