Squadron Energy has quietly pulled its application for a gas-fired power station at Port Kembla. 

Despite previously securing State Significant Infrastructure status in 2020, the project was beset by slow progress. However, the company led by mining magnate Andrew ‘Twiggy’ Forrest, says it is still committed to a gas firming project in the Illawarra region.

The withdrawal occurred in August, according to reports.

The original project aimed to establish a $1.3 billion dual-fuel power station with the capacity to run on a blend of 50 per cent natural gas and 50 per cent green hydrogen, contingent on local green hydrogen sources developing. The scale of the project justified its State Significant Infrastructure status.

While the withdrawal could be a setback for the Illawarra region, Squadron Energy says it is still working on a liquefied natural gas (LNG) terminal at Port Kembla, with plans to import LNG on the east coast. This LNG will supply a 635-megawatt power station at the port, using large floating storage regasification units.

The company is concurrently progressing with a similar power station in Dubbo, scheduled to become its initial firming power plant in 2026.

The Port Kembla Energy Terminal, integral to the previous government's planned ‘gas-led recovery’, received $30 million in the 2021-22 budget under the Underwriting New Generation Investments program. 

Despite its potential to supply over 70 per cent of the state's gas needs upon completion, the terminal struggles to attract customers.

Squadron Energy has not finalised contractual agreements with energy providers and was removed from the Australian Energy Market Operator's list of projected projects due to insufficient contracted capacity.