The scandal of Vales Point

| November 6, 2023

Vales Point Power Station is one of the two remaining coal fired power stations on the shores of Lake Macquarie in New South Wales. It stands on the southern shore of the lake, near the township of Mannering Park where its two steam turbines can pump out a 1,320 MW (1,770,000 hp) of electricity.

It was the first major power station in New South Wales to be located near its coal fuel source, and seemed destined to be phased out as the state switches to renewable energy sources in the fight against climate change.

There is no doubt that climate change is a major threat requiring an immediate and intelligent response. However, the Green lobby needs to be a lot more astute in the way it goes about influencing public policy. Otherwise, the environmental and economic outcomes are likely to be counterproductive, as in the case of this power station.

Back in 2015, the NSW government sold the ageing Vales Point Power Station for $1million. The then NSW treasurer Gladys Berejiklian said selling it for scrap was a better deal for taxpayers than keeping it. She said it couldn’t compete with cheaper brown coal-fired electricity from Victoria.

The Greens wanted to “close down the equivalent of one coal-fired power station a year”, whatever that means. At the same time, and since, they promoted EVs and want to ban domestic gas appliances, etc. In other words, in effect, the Greens’ policy was to simultaneously increase demand for electricity and reduce supply. Every shopper knows how that equation works.

But The Greens weren’t interested in helping to solve the classic economic problem.They were content to snipe at the federal government from the cross benches, at a safe distance from responsibility.

It’s reasonable to expect a political party aspiring to participate in government would have moved on from rash policies based on wishful thinking.

While The Greens were celebrating the closure of Hazelwood, they failed to address its impact on electricity prices. At the time, I estimated that the energy demand for road transport alone in Australia would be roughly equivalent to the output of more than 20 Hazelwood power stations running at 100% capacity 24/7.

It seems I wasn’t the only one to notice that the energy supply and demand sums didn’t quite add up. But I didn’t have the contacts, the business knowhow or the finance to take advantage of such a glaring opportunity.

In November 2015, the Government of New South Wales sold Delta Electricity, which at that time owned only the Vales Point Power Station, to Sunset Power International for just $1 million – less than the cost of a modest suburban house.

Less than two years later, in 2017, it was valued at $732 million, and so made owner energy entrepreneur and former National Party candidate Trevor St Baker a semi-billionaire, although in December 2021, the value of the plant was cut to $156 million and the annual profit was reduced 93% to $9.3 million, with the owner blaming the COVID-19 pandemic for reducing demand and an influx of cheaper renewables reducing wholesale electricity prices.

In September 2022 Sunset Power announced the sale of Vales Point Power Station to a Czech family investment group – Sev.En Global Investments. It will be interesting to see how much they make – and how much the long suffering tax players and energy consumers of New South Wales have lost out on.