Don’t expect a new station anytime soon

The prospect of electricity fuelled by so-called ‘clean coal’ may have generated headlines across the nation in recent weeks, but Latrobe Valley residents are being warned not to expect a new power station in the region anytime soon.

Last week the issue was back in the spotlight when Federal Energy Minister Josh Frydenberg confirmed the government was considering a directive to the Clean Energy Finance Corporation to consider investing in ‘clean coal’.

But now Grattan Institute energy program director Tony Wood said without a mechanism to guarantee long-term profits, it was unlikely investors would have the confidence to invest in new plants.

He said one such mechanism would be for the government to sign a long-term contract to purchase electricity from a potential new generator.

“That’s fairly bankable, you’ve got a contract with the government – provided the numbers stack up you can take it to a bank and get investor support for it,” Mr Wood said.

“In the absence of that I don’t see it happening – so far the government is yet to go down that path.”

The $10 billion CEFC was formed by the Gillard government in 2012 as part of its suite of ‘carbon tax’ policies.

Its mandate is to invest in clean energy technologies.

The corporation is prohibited from investing in coal under existing rules.

But while the conditions do not exist at the moment to build a plant, Mr Wood said if it was going to happen, existing power regions would be the best place for it.