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Czech investor ‘excited’ to be coal-fired power’s white knight

AFR, Sep 27, 2023                            Link to the original article

Acquisitive power generator Sev.en Global Investments has heaped pressure on Origin Energy’s talks with government over a life extension for the Eraring power station, saying it wanted to buy more Australian power assets and had more appetite to manage coal’s gradual exit than most incumbents.

Czech-owned Sev.en added four years to the life of NSW’s Vales Point coal-fired power station in July, shortly before the NSW government asked Origin to extend the life of the Eraring coal-fired power station beyond 2025 to help avoid blackouts.

Alan Svoboda

Sev.en’s Alan Svoboda says closure dates for coal-fired power may be too ambitious. 

Origin’s plan to shut Eraring in 2025 is a key plank in its emission reduction goals and the company is expected to seek financial support from the NSW government before agreeing to extend Eraring’s working life.

Former NSW Treasurer Matt Kean has suggested the cost to taxpayers could be close to $3 billion.

Sev.en chief executive Alan Svoboda said many of the official closure dates for coal-fired power stations were “too quick” and governments may find it cheaper to have Sev.en managing those assets’ final years given the Czech company had experience running power stations in Europe and, unlike some peers, was “excited” to own fossil fuel assets.

“Some of the closure announcements were probably too quick to make, and the system might not be ready for such loss of capacity,” he told The Australian Financial Review.

“But at the same time I understand the current owners might have difficulty owning such assets in their portfolios, so that is where we could partner to either the owners or the government to be the intermittent operator until the assets can be phased out fully and replaced by clean sources.”

Mr Svoboda did not directly name Eraring nor Origin, but appeared to make a veiled reference to Origin’s compensation negotiations with the NSW government by stressing that Sev.en had the “appetite” to own and manage coal-fired generators at a time when they were unpopular with sustainability focused investors.

“With regards to Australia, we would actually like to grow more in power generation,” he said.

“The Vales Point power plant, for us that is a first step towards building some portfolio generation capacities if possible.

“If I can make a bold statement; us operating these plants might actually come cheaper than the government subsidising somebody else to do so because we have the experience, we have the knowledge and the appetite to take such jobs, whereas the other owners might not be excited about it.”

The Victorian government is also suspected to have provided financial undertakings to support AGL Energy in keeping the Loy Yang A coal-fired power station open until 2035.

Vales Point is officially scheduled to shut in 2029 but Sev.en told the energy market operator in July that a technical assessment of the power station had found it was capable of operating until 2033.

Climate goals watered down

We could help Australia to manage the transformation of the energy generation mix in a way that would still provide security and stability of supply on the path forward,” Mr Svoboda said, after striking a deal to buy 51 per cent of Queensland coking coal miner Coronado on Tuesday.

Sev.en also owns minority stakes in Queensland’s Millmerran and Callide power stations.

The push to extend the life of coal-fired power stations in Australia comes after British Prime Minister Rishi Sunak last week watered down some of Britain’s climate action goals, including by deferring until 2035 a plan to phase out petrol and diesel cars by 2030.

European oil giants Shell and BP have stepped back from plans to curb oil extraction while Australian miner New Hope said it had recently found European insurers were more willing to work with coal miners than they were two years earlier.

Those anecdotes have fuelled perceptions that corporate and political leaders in Europe have buckled under the ambitious targets set around the time of the 2021 Glasgow climate conference and amid high energy prices caused by the blacklisting of Russian commodities.

But some forms of climate action are still pushing ahead; a carbon border adjustment scheme that taxes dirty imports to the European Union will take effect from October 1.

Mr Svoboda said European leaders had tried to set an example for the world on climate action, but were now having to reset the timing of their goals.

“We have seen in Europe and other places that sometimes the decision makers are too ambitious about how quickly the infrastructure can be strengthened and the new sustainable generation capacities can be built,” he said.

“The path forward is there and everyone agrees that long term this is what needs to be done, but the timing probably needs to be adjusted so that Europe does not lose global competitiveness as a result of this big push toward a sustainable economy.”

Mr Svoboda’s comments come almost exactly one year after Sev.en acquired Western Australia’s Lake Way sulphate of potash project from the administrators of collapsed company Salt Lake Potash.

The Lake Way project aims to make a crop nutrient for growers of berries, nuts and citrus fruits by extracting potassium-rich groundwater “brines” from beneath an ephemeral lake in the outback, then concentrating the brines through solar evaporation and a processing stage.

Mr Svoboda said heavy rains had delayed the start of commercial production at Lake Way, but he hoped the asset would start producing soon.

“We experienced something like a 50-year flooding earlier this year so since then we are coping with the aftermath of the floods,” he said.

“But the good news is the [flooding] has been mitigated fully, and with the high water, extra salt came into the brine and the underground was producing a higher concentration brine.

“So we hope this bad thing [flooding] that happened has some good implications for the long term and we hope to be up and running in the next few weeks or few months”.