APA and CS Energy Advance 400MW Brigalow Gas Peaker in Queensland

APAJF 0.00% GEV +1.70%

Australia’s APA Group (ASX:APA) has taken a major step in expanding its gas-powered generation footprint, signing a Joint Development Agreement with state-owned CS Energy to advance the proposed 400MW Brigalow Peaking Power Plant next to the existing Kogan Creek facility in Queensland.

Under the pact, APA will ultimately take an 80% ownership stake and lead project delivery, while CS Energy will retain 20% and operate the plant. The project—targeted to begin operations in 2028—aims to supply firming capacity during peak electricity demand periods, backing up the rapid build-out of variable renewable energy in Queensland.

The agreement outlines the pathway for APA to fund early development, negotiate long-form contracts, and transition into majority ownership once government and environmental approvals are secured. GE Vernova has been selected to supply gas turbines, with final capital expenditure to be determined after detailed engineering in early 2026.

To reduce exposure to wholesale electricity markets, APA plans to enter a 25-year hedge offtake agreement with CS Energy that will provide inflation-linked revenues and a modest variable component for upside. APA said the project’s returns are expected to meet internal investment hurdles and will be funded from existing balance-sheet capacity as part of its A$2.1 billion organic growth pipeline.

The Brigalow project strengthens APA’s position in gas-powered generation at a time when Australia is grappling with reliability challenges tied to the accelerated rollout of renewables and coal retirements. Queensland, in particular, has leaned on gas generation to firm its ambitious renewable expansion, with the state government pushing new storage and flexible generation capacity to maintain system security.

The plant will connect to APA’s Roma–Brisbane Pipeline via a new lateral transport and storage line—covered under a previously finalised Project Development and Gas Transportation and Storage Agreement from July 2025. This integration enables APA to leverage its existing gas transmission infrastructure and aligns with its parallel agreement with CS Energy for the new lateral pipeline.

The project is positioned as a key contributor to Queensland’s broader energy-transition agenda, supporting both the state’s renewable rollout and its energy-security commitments. APA expects the development to deliver value across regional communities and energy consumers, while reinforcing investor confidence as the company accelerates growth in gas transmission, storage, and remote power assets.

APA will provide further updates as approvals are secured and long-form agreements are executed, likely by mid-2026.

By Charles Kennedy for Oilprice.com

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