France’s Engie has received two bids for its Loy Yang B coal-fired power
plant in Australia.
Chinese-owned Alinta Energy and private Australian firm Delta Electricity have made the bids for the 953 MW Victoria-based plant, according to Reuters.
Analysts have estimated the plant could go for as much as A$1bn.
The plant is 70 per cent owned by Engie and 30 per cent owned by Japanese trading house Mitsui & Co. Both companies are selling their stakes.
Coal-fired Loy Yang B is seen as critical to stable power supply in Australia’s eastern states, where households and major businesses have been hit by a string of blackouts over the past year at times of high demand and weak wind power.
But analysts believe government energy policy uncertainty has hindered construction of new baseload power stations.
The sale will be a test of how much the energy market has changed since AGL Energy bought the larger, neighbouring Loy Yang A power plant in 2012 and Bayswater in 2014.
Based on prices AGL paid, Loy Yang B would be worth around A$330m ($265m). But power prices have surged since then, due to the closure of other coal-fired power plants, creating a shortfall of power to back up intermittent wind energy and made baseload power plants more valuable.
At the same time, the Australian government is pushing AGL to extend the life of its Liddell coal-fired plant beyond 2022 to shore up baseload power supply and avert price spikes, which could make the market less profitable for other plants.