The company will invest up to $400m to build the power station, which will comprise four reciprocating engine units capable of generating 18MW of capacity each.
Currently, AGL is assessing sites for the power near its Newcastle Gas Storage Facility.
AGL targets to complete the construction on the power plant during the 2022 calendar year.
AGL managing director & CEO Andy Vesey said: “AGL is committed to supporting the orderly transition of Australia’s electricity generation capability to modern, clean and reliable energy supply.
“That’s why we gave seven years’ notice of when we intend to close the Liddell Power Station at the end of 2022 and we are pleased to commit today to build the power station near Newcastle.”
The gas-fired power station is part of stage 1 of the company’s NSW Generation Plan submitted to the Federal Government and the Australian Energy Market Operator (AEMO) in December 2017.
Under the plan, the stage 1 projects also include a 100MW efficiency upgrade to AGL’s Bayswater Power Station, an agreement for AGL to offtake 300 MW of solar capacity from Maoneng Australia’s Sunraysia solar project, the conversion of a Liddell turbine into a synchronous condenser, and up to 20MW of demand response capacity.
Stage 2 of the plan includes projects needed to meet AGL’s potential uncontracted commercial and industrial customer demand.
Vesey said: “AEMO has confirmed that our Plan addresses the capacity shortfall that may occur as a result of Liddell closing, and we remain committed to working with AEMO to deliver on that.
“This is in addition to our generation projects already under construction: 210 MW of gas-fired generation in SA and, through the Powering Australian Renewables Fund, 653 MW of wind farms in Qld and NSW.”
