NSW backs gas peaking plant as state and federal Labor clash over grid policy

New South Wales plans to issue a tender for a gas-fired peaking plant that would act as backup power for a greener grid, according to Energy Minister Penny Sharpe. She highlighted that the plant would operate only intermittently, filling gaps when renewable generation falls short and stored energy is exhausted, a need projected for the 2033-34 reliability window. The initiative will be folded into the Long Term Energy Services Agreement, which secures a minimum revenue stream for renewable, storage and firming projects.

This state move conflicts with the federal Labor government's Capacity Investment Scheme, which excludes all fossil fuels, including gas, from direct underwriting. The tender process will be overseen by one outlet NSW Consumer Trustee ASL, with design consultation opening before a 2027 launch. Treasury Minister Daniel Mookhey used the same briefing to announce a debt-reduction strategy aimed at trimming more than $10 billion from the state's liabilities, emphasizing fiscal responsibility ahead of the March state election.