MELBOURNE, June 5 (Reuters) - Australia’s most solar-power dependent state, Queensland, said it would restart a gas-fired energy plant next year to help cap soaring electricity prices and make the grid more stable, a move that prompted an instant drop in power futures prices on Monday.
The step is part of a $1.16 billion plan by the state to beef up energy security to appease big energy users like global miners Rio Tinto Plc and Glencore Plc, which have suffered power cuts and a near trebling in electricity prices over the past year.
“We have used our public ownership of electricity assets to bring more supply into the market to reduce volatility and put downward pressure on wholesale prices,” Queensland Premier Annastacia Palaszczuk said in a statement.
The plan was unveiled ahead of recommendations from Australia’s chief scientist due this Friday on how to make the national electricity market more secure in a report commissioned last year following a state-wide blackout in wind-dependent South Australia.
Queensland said that in the first quarter of 2018, it would reopen state-owned Stanwell Corp’s 385-megawatt (MW) Swanbank E gas-fired power station, which was mothballed three years ago.
The move was a backdown for a state that has set a target to obtain 50 percent of its electricity from renewable sources.
However, it also said it would back 400 MW of new renewable energy projects, including 100 MW of energy storage.
Prices for the March quarter of 2018 for Queensland base load electricity futures fell 11 percent to A$105.50 following the announcement on Monday.
“The Queensland government’s A$1.16 billion plan ... has had an immediate impact on energy future prices, providing real benefits and a ray of hope to all energy users,” said Andrew Richards, chief executive of the Energy Users Association of Australia, which represents big power consumers.
Glencore, which has threatened to close its copper smelter and refinery in Queensland, had no immediate comment on the state’s power plan.
Rio Tinto, which curbed output and slashed jobs at its power-hungry Boyne Island aluminium smelter in the state earlier this year, was not immediately available to comment.
Lining up affordable gas for Swanbank E could be a challenge, amid concerns about a shortfall of supply, with gas being pulled out of the domestic market for liquefied natural gas (LNG) exports from Queensland.
Reporting by Sonali Paul; Editing by Joseph Radford