Government to seek advice to save a number of coal-fired power stations

The advice, to be compiled by the Australian Energy Market Operator, comes amid confusion over the future of the Liddell power station in NSW.

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Owner AGL told the stock market on Wednesday it would close the Hunter Valley plant in 2022, reaffirming a decision announced in April 2015.

“AGL will continue to engage with governments, regulators and other stakeholders to deliver appropriate outcomes but notes that the company has made no commitment to sell the Liddell power station nor to extend its life beyond 2022,” the company said.

However, the prime minister said AGL had told him it was prepared to “discuss the sale of the power station to a responsible party”.

0:00 Energy Minister Josh Frydenberg on AGL Liddell Power station statement Share Energy Minister Josh Frydenberg on AGL Liddell Power station statement

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Mr Turnbull said the government had been advised that after 2022, when the Liddell plant was scheduled to close, there would be a 1000MW gap in baseload, dispatchable power generation.

The Snowy Hydro 2.0 project would not be available in time to fill the gap.

“What are now doing is ensuring that we put in place all of the options that we can examine to make sure that that 1000 megawatt gap in dispatchable power is not realised,” Mr Turnbull told reporters in Canberra.

It was too early to speculate whether AGL, which would meet with the government next week, would be offered financial incentives to keep the Liddell plant running.

Mr Turnbull said keeping Liddell open was one option, but “no doubt there are others”.

Energy Minister Josh Frydenberg said another part of the solution lay in a “strategic reserve” of electricity which was estimated to cost $50 million a year to stave offload shedding.

Deputy Prime Minister Barnaby Joyce earlier said AGL was open to selling the plant in order to provide electricity to NSW residents and businesses until 2027.

Labor frontbencher Joel Fitzgibbon, whose seat is in the NSW Hunter Valley, accused Mr Turnbull of offering false hope.

“Liddell is almost 50-years-old; no-one would be happier than me as the local member to think that we could extend the life of Liddell but it’s not going to happen,” he said.

Nationals senator and former resources minister Matt Canavan predicts people would be lining up to buy the station.