AGL Energy Ltd says lower demand for electricity is behind its decision to suspend development of the first stage of a gas-fired power station in NSW.
In a statement to the Australian Securities Exchange on Friday afternoon, AGL said market conditions were behind the decision to shelve construction of the Dalton power station in the New South Wales southern tablelands.
“The economic viability of this project had been under review for several months because of market conditions,” AGL said in the statement.
The $1.5 billion project received development approval to build the 1,000 megawatt gas turbine power station from the NSW government in July.
The first phase of construction would have given the plant an initial output of 500 megawatts.
An AGL spokesperson said the growth in demand for energy in Australia had slowed in recent times due to higher prices, economic conditions and milder weather, among other factors.
Moreover, consumers were also becoming more efficient in their electricity amid rising power bills.
“It is still on the books, we are just not going to progress it any further at this stage,” the spokesperson said on Friday.
“We could certainly take it off ice if demand changes, economic conditions change – all those sorts of things.”
Earlier this week, EnergyAustralia said it would cut electricity output at its Yallourn power station in Victoria’s Latrobe Valley due to increased costs and a drop in demand.
Only three of the four units at the plant- which supplied 20 per cent of Victoria’s electricity – would generate power, EnergyAustralia said on Wednesday.
Residents near the proposed AGL power plant at Dalton have raised concerns about the proposed construction, citing the use of groundwater, pollution and noise.
The NSW planning assessment commission contained more than 140 conditions to address community concerns, AGL said in July.
The federal government gave the project the green light in September.
AGL said in Friday’s statement that state and federal government approvals remained valid for the next five years.
AGL closed up 16 cents, or 1.08 per cent, at $15.02.
