Carrying the can for coal extensions


Hey Reader, in today's edition:

  • Coal extensions face growing risks
  • Data centre energy warning
  • Projects rush to end-of-year deadline

Legal danger and targets in jeopardy from NSW coal

Current planning assessment process and decision-making guidelines in NSW are inadequate to respond to impacts of coal mining on climate change, according to the Net Zero Commission.

Continued extensions or expansions to thermal coal projects in NSW are also contrary to climate change laws, and regional coal communities will need new industries as key trading partners reduce demand to meet net-zero commitments.

That’s the warning Net Zero Commission experts will deliver on Friday at an inquiry into emissions from the fossil fuel sector by a NSW Parliament joint standing committee, detailed in the first of a series of Spotlight reports into how the state can achieve its emissions reduction targets and adaptation objectives.

“The four largest buyers of NSW coal – Japan, China, Taiwan, and South Korea – have all made net zero pledges and are developing and implementing policies to achieve them. These will affect demand for NSW coal, with associated impacts on communities and industry in NSW.
We do not make policy. Our purpose is to advise those who do and inform the wider debate on how we effectively reduce climate risk.”
Net Zero Commission Chair Nick Rowley

Nor is NSW on track to meet emission reduction targets and any increased emissions from the “sizeable pipeline” of proposed coal project expansions and extensions would force other sectors to make greater reductions if the state is to meet its targets.

The federal Safeguard Mechanism allows liable facilities to use carbon credits to offset emissions associated with their mining operations. This means on-site abatement is not necessarily needed to comply with requirements, which has resulted in relatively limited uptake of measures to avoid and abate emissions on-site at coal mines in NSW, they warn.

Energy hungry 'tech bros' need a policy response

Australia’s data centre developers are not procuring enough clean energy to offset the price impact of their increased energy demand on the National Electricity Market (NEM), nor are policy makers doing enough to make them green.

If no additional offsetting renewable generation and storage is built, modelling based on the central case would result in wholesale prices rising by 26% in NSW and 23% in Victoria by 2035 compared to the baseline scenario, warns a Clean Energy Finance Corporation (CEFC) report with consultants Baringa.

Australia’s competitive advantages over Asia-Pacific neighbours include abundant renewable resources, land, data sovereignty, geopolitical stability, sub-sea connectivity and a superior Environmental, Social, and Governance profile. Bond issuers, sustainability-linked loan providers and infrastructure funds can act as important triggers, rewarding innovation and investment in Australia.

"Innovation in efficiency and storage is redefining what data centres can be - not just major consumers of electricity, but active participants in the clean energy system. With the right policy settings, renewable generation and storage, and operational innovation, Australia can position itself as a leader in clean digital infrastructure.
With this rapid growth comes the potential for adverse impact on the energy grid as well as electricity prices. By investing early in renewable energy and storage capacity to power the sector and implementing appropriate regulatory settings, we can avoid these pitfalls and benefit from a booming new industry.”
CEFC Head of Infrastructure Julia Hinwood

Location will be critical as additional hyperscale and co-location data centre load could increase pressure on the grid in some areas, but could also tap into otherwise curtailed renewables and help mitigate minimum system load risks.

Some 3.2GW of data centre capacity is expected to be operational by 2035 (up from 0.3GW in 2024/25) largely in Western Sydney and Melbourne, representing up to $135 billion in investment and 8-11% of projected electricity consumption across the NEM and WEM in 2035 (up from 1% currently).

Catch Up

Capital

Potentia Energy completed A$830 million in debt financing for a portfolio of wind, solar and battery assets. The financed portfolio includes more than 600MW across six assets, strengthening the company’s funding base as seeks to expand. The debt is being provided by a group of seven major lenders: Bank of China (SHA: 601988), BNP Paribas (EPA: BNP), HSBC (LON: HSBA), Mizuho (TYO: 8411), Societe Generale (EPA: GLE), Sumitomo Mitsui Banking Corporation (TYO: 8316) and Westpac (ASX: WBC).

Singapore-listed energy player Sembcorp has agreed terms to acquire Australia’s fourth-largest utility company, Alinta Energy, in a deal valued at $6.5 billion. The deal will see the Temasek-backed business acquire Alinta in whole, including its coal-fired Loy Yang B power plant in Victoria, retail business and renewables assets. (AFR)


Projects

CIMIC’s UGL was selected by Neoen and Tesla to construct Stage 3 of Neoen’s Western Downs Battery in Queensland, after the successful delivery of Stage 1 — with customers including AGL (ASX: AGL), Engie and Shell Energy Australia — and the early completion of Stage 2 (270 MW/540 MWh) in November 2025. UGL will prepare the site and install 312 Tesla Megapack 2XL units, along with high-voltage infrastructure, control and switchroom facilities, earthworks and footings, and will also provide testing and commissioning support for integration with the grid.

Origin (ASX: ORG) approved the $80 million fourth stage of its large-scale battery at Eraring Power Station, adding 360MWh of storage to cover the evening peak. Construction of stage four will begin before the end of the year to come online in the first three months of 2027, with equipment supplied by Finnish technology group Wärtsilä and design and construction services by Enerven. Across all four stages, the total size of the Eraring battery will now be 700MW/3160MWh, the largest approved Battery Energy Storage System (BESS) in the Southern Hemisphere, Head of Energy Supply and Operations Greg Jarvis said.

Powerlink energised the connection to Iberdrola Australia’s Broadsound Solar Farm ahead of schedule, allowing testing to ready it for exports to the NEM when construction is complete. Queensland’s Energy Roadmap, as well as extending coal generation to the 2040s, identified the significant body of work by Powerlink in Central Queensland to reinforce the network and connect new power generation sources. Broadsound, located 150km northwest of Rockhampton, will add 377MW of power generation and a 180MW/360MWh BESS.


Policy

Under Queensland’s Planning (Battery Storage Facilities) and Other Legislation Amendment Regulation 2025, large stand-alone BESS projects (50MW or more) must now undertake social impact assessment and agree with the local government on community benefits before lodging a development application. All large-scale standalone BESS projects will also be impact assessable, requiring mandatory community consultation. The State Assessment and Referral Agency will now manage all application assessments for these projects, guided by a new State Code 27 that sets benchmarks for safety, bushfire risk, noise, and agricultural impacts.

Australia needs to create new forest plantations the size of the ACT every year if it is to achieve net zero carbon emissions by 2050, which would require reforestation to increase by a factor of at least 100 to meet government forecasts. The findings are part of a Net Zero Australia modelling project, which is funded by gas pipeline group APA (ASX: APA), gentailer Energy Australia, and Iberdrola. (AFR)


Regulation

Rewiring Australia welcomed a major rule change which will soon require households across eastern Australia to pay upfront fees of more than $2,000 to connect to gas. The Australian Energy Market Commission (AEMC) made the decision amid declining demand, which will apply to south-east Queensland, NSW, ACT and South Australia from next October. It brings these jurisdictions into line with Victoria which already requires developers to pay upfront gas connection costs.

Limiting the ability of electricity retailers to offer incentives to new customers to sign up to better deals will have major implications for a competitive market, according to the peak body for retailers, the Australian Energy Council (AEC) said, after AEMC proposed changes to retail pricing as part of its pricing review. “There is already a safety net in the form of the regulator-set Default Market Offer and Victorian Default Offer for customers who do not shop around, and these are set so they pay a reasonable price for their electricity,” AEC CEO Louisa Kinnear said. But she conceded other recommendations, such as changes to network tariffs to avoid complexity, would help make a difference for customers and address barriers to “retail product innovation”.


Technology

Australian homes are becoming the engine of the clean energy transition, with a significant share of gas-using households planning to switch fully to electricity and smart energy systems set to surge, according to the Telsyte Australian Smart Home Study 2024-2028. The number of EV households is expected to reach more than two million by 2028, with most owners preferring to charge at home and a growing interest in solar-linked and off-peak charging solutions.

UK start-up Cambridge Photon Technology has developed a photon multiplication technology that splits high energy photons to increase usable light for silicon cells. The UK-based startup has three patents relating to its technology, has identified outsource manufacturers that can produce its solution at scale, and has secured seed funding. (PV Magazine)


Climate

In a boost for climate science, the federal government allocated $208.8 million over seven years to Antarctic research capabilities. “Supporting Nuyina, our world-leading icebreaker, doing its critical resupply for stations and also doing more marine science, looking at the Marginal Ice Zone and krill, and understanding how the Southern Ocean impacts on global climate systems and on the biodiversity of the Southern Ocean. It's really important. It's part of our leadership in Antarctica,” Emma Campbell, Head of the Australian Antarctic Division, told reporters.


Random

NordPass released a study that challenges the assumption digital natives are naturally cybersecurity savvy. The data reveals Gen Z, or zoomers, use passwords as weak as their grandparents’.

What's On

December 12
Emissions from the fossil fuel sector

NSW Net Zero Commission Chair Nick Rowley and Executive Director Will Rayward-Smith will give evidence at the inquiry into emissions from the fossil fuel sector by the NSW Parliament’s Joint Standing Committee on Net Zero Future.


December 15
AEMC Public Forum: The pricing review

The Australian Energy Market Commission will host an online forum on its draft recommendations for the pricing review.


December 17
AER Public Forum: AusNet Transmission Revenue Proposal 2027-32

The Australian Energy Regulator will host an online public forum for stakeholders to ask questions about AusNet's 2027-32 transmission revenue proposal.

The Energy

The Energy is dedicated to covering the business of energy and in particular the people, capital, projects and emerging technology behind the energy transition.

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