Snowy Hydro releases business case for Kurri gas-fired peaker project

Project proponent Snowy Hydro released the key document for the 660 megawatt generator on Friday.

It shows the project will firm the equivalent of 160,000 household solar installations, thereby reducing emissions by about 87 per cent compared to coal fired energy.

"There is a desperate need of dispatchable energy, such as gas peaking power, to firm renewables and decarbonise the National Energy Market (NEM), Snowy Hydro chief executive Paul Broad said.

"This is good for the environment, good for consumers and good for the local community. It will underpin renewable energy, help keep the lights on and create jobs and investment in the Hunter Region."

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The project, which has yet to receive final State Government approval, has become a lightning rod for opponents of gas technology in the lead-up to next month's climate summit.

Of the 261 submissions received during the recent public exhibition period, only two were in favour of the project.

The financial case for the project is also described as 'strong', even though the generator will only run for about two per cent of the time.

It is forecast to deliver a double-digit internal rate of return of 12.3 per cent.

The figure compares to the return on large wind and solar projects built in recent years that have had a return rates of between seven and nine per cent.

"The robustness of the business case is due to the fact that the project earns revenue from multiple sources, which will increase competition in each of the National Energy Market's relevant market segments while playing a material role in safeguarding supply reliability in the National Energy Market," the business case says.

The government has consistently argued the gas peaker is needed to ensure stability and affordability of electricity supply following the closure of Liddell Power station next year.

"The shutdown of Liddell has the potential to create a repeat of the effects of the Hazelwood closure. A new gas plant, built by Snowy Hydro, represents an insurance policy for safeguarding system security and managing the NEM supply / demand balance," the business case says.

"Peak demand growth is growing, despite average consumption remaining flat. Peak demand is difficult to predict, but every material driver is pointing to the need for additional reliable, fast-start capacity."

Located in the federal seat of Paterson, the project will feature prominently in next year's federal election campaign. Paterson MP Meryl Swanson has been a vocal supporter of the project, as is retiring Hunter MP Joel Fitzgibbon.

An environmental impact statement for the project released in May shows it is expected to create about 250 jobs during construction while there will be 10 ongoing full time jobs once complete.

The project's construction timeline is based on the NSW Department of Planning approving the project by the end of the year.

If it goes to schedule, the generator will be ready to produce power by December 2023.

The project's major supporting infrastructure consists of a 132 kilovolt electrical switchyard located adjacent to the project site, a 20 kilometre new gas lateral pipeline plus 14 kilometres of looping.

This component of the project is expected to create 350 construction jobs.

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