The NSW Generation Plan proposes a mix of high-efficiency gas peakers, renewables, battery storage and demand response, coupled with an efficiency upgrade at Bayswater Power Station and conversion of generators at Liddell into synchronous condensers.

Both plants are located between Muswellbrook and Singleton.

The feasibility of a pumped hydro project in the Hunter region is being explored with the NSW Government.

Details of the plan were developed to align with the National Energy Guarantee.

“This plan demonstrates that old power plants can be replaced with a mixture of new, cleaner technology, while improving reliability and affordability,” AGL chairman Graeme Hunt said.

“Decisions for the investments are staged to enable flexibility to respond to the changing needs of the market and improvements in technology over the next five years.”

The AGL Board has approved the start of efficiency improvements at Bayswater that will create more capacity without using additional fuel; ordering equipment to convert generators at Liddell to synchronous condensers; and the signing of contracts to purchase 300MW of generation from two new solar power stations to be developed by third parties in NSW.

An assessment of AGL’s plan found the replacement generation is more affordable at $83/MWh, compared with extending Liddell at $106/MWh.

The plan was also found to deliver reliable, dispatchable power for longer, due to a longer asset life of 15-30 years, compared with a Liddell extension of five years.

Independent analysis found an extension until 2027 would cost approximately $920 million.

The AGL Board also considered selling Liddell and determined that a sale would not be pursued as Liddell is currently needed to supply energy to its customers and will be repurposed to form part of its alternative generation post 2022.

In addition, as Liddell shares infrastructure with Bayswater Power Station – such as coal unloading facilities and water systems – separating it would require duplication of this infrastructure.

AGL has committed to its workforce it will not use forced redundancies when Liddell retires in 2022.

AGL’s proposed portfolio to replace Liddell will shrink its carbon footprint by 17.6 per cent.

AGL provided seven years’ notice of the closure of Liddell to avoid the volatility in the market that has been seen from the sudden closure of other coal and gas plants.