The Federal Government has confirmed its commitment to building a $600 million gas-fired peaking plant at Kurri Kurri as part of its strategy to stabilise the energy grid during the transition to renewable energy.
Speculation about the project's future has been rife following the state government's announcement last week that a plan by businessman Andrew Forrest to build a $1.3 billion gas-hydrogen power plant at Port Kembla had been declared "critical state significant infrastructure".
NSW Deputy Premier John Barilaro,who described the 635 megawatt project as a "game changer", said the project was needed to make up the dispatchable energy shortfall that will occur following the closure of Liddell power station in 2023.
Opponents of the Kurri project interpreted the announcement as an indication that it would not proceed.
Unlike the Port Kembla project, the Kurri plant's proponent, Snowy Hydro, has reached a final investment decision and has commenced development work.
Energy Minister Angus Taylor told the Newcastle Herald on Tuesday that the government would proceed with the project to deliver sufficient dispatchable capacity in the NSW market.
"The Government is committed to Snowy Hydro's 660 megawatt Hunter Power Project at Kurri Kurri which is critical to keeping prices low and the lights on following the closure of the Liddell Power Station," he said.
"This project is great news for the Hunter Valley."
An environmental impact statement for the project, which is yet to receive final planning approval, shows the construction of the plant and the connecting pipeline will support 600 direct jobs and 1,200 indirect jobs.
Ultimately the plant will support 10 full time jobs.
It is also likely that the generator will run on diesel fuel only for at least six months at the end of 2023 until a permanent connection to the Sydney-Newcastle gas pipeline is complete.
The generator have been designed to allow them to use a blend of hydrogen and gas in the future.
When fully operational the plant is expected to have a "capacity factor" of about two per cent.
Many of the submissions argued that the generator was not needed.
They also raised objections to the use of fossil fuel and the project's greenhouse gas emissions.
The sentiment was also reflected in an Australian Conservation Foundation climate survey published this week that showed voters overwhelmingly wanted the government to take stronger action on climate change and expressed a preference for the development of renewable energy projects over fossil fuel projects.
