Power plants to go up for auction

The NSW government is set to formally kick off the process for the sale of the state's small collection of renewable energy plants, adding momentum to the $3 billion power privatisation program.

The NSW government is set to formally kick off the process for the sale of the state's small collection of renewable energy plants, adding momentum to the $3 billion power privatisation program.

Treasurer Mike Baird is expected to call for expressions of interest on Monday for the package of wind and hydro power plants, which also comes with a mallee-based carbon storage venture. Altogether the assets could fetch as much as $100 million

The launch of the sale, run by Goldman Sachs, comes as bidding is under way for the state's biggest power plant, the $2.1 billion Macquarie Generation. AGL Energy, ERM Power and China's Shenhua Energy have been shortlisted for MacGen. Final bids are due towards the end of January after due diligence is completed.

The government is also expected to begin the auction process for the last major generator, Delta Coastal, before the MacGen sale has completed, expected in the March quarter next year. Delta comprises the Vales Point coal-fired power station and the Colongra gas-fired peaking plant.

The renewable energy plants are housed within Green State Power, a company set up in June to operate the assets, which were previously owned by state-owned power company Eraring Energy. The output from the wind farms is committed under relatively short-term contracts to Origin Energy.

The package includes the 58MW Hume, 28MW Burrinjuck and 6MW Keepit hydro power generators, the 10 MW Blayney wind farm and an interest in the 5MW Crookwell wind farm. The carbon storage venture involves 1575 hectares of mallee trees to be registered with the Clean Energy Regulator as a certified storage project.

The assets are expected to attract interest from dedicated renewable energy companies such as Pacific Hydro, or from funds and financial institutions. Larger utilities such as AGL are unlikely to participate, meaning there should be no overlap between the sales processes with the large generators being sold through MacGen and Delta.

Eraring's larger assets were sold to Origin Energy in August, after Origin previously acquired the rights to trade the generator's power in the first round of the NSW electricity privatisation.

The renewable energy assets are small, but the government is expected to underline their proven capacity, operational track record and low cost of production.

Expressions of interest are expected to be due towards the end of January. The process is likely to follow a typical three-stage process, with a shortlist to be drawn up from initial bids before a final bidding stage, to be wrapped up by midyear.

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