Energy Security at Risk if Brigalow Peaking Plant Faces Delays or Approval Challenges
APA Group has entered a joint development agreement with CS Energy to build and own a 400MW gas peaking power plant in Queensland, aiming to bolster energy security and support renewable integration by 2028.
- APA to acquire 80% ownership and lead construction management
- 400MW gas plant to complement renewable energy and meet peak demand
- Project conditional on approvals and detailed engineering design
- 25-year hedge offtake agreement with inflation-linked returns
- Part of APA’s $2.1 billion organic growth pipeline
Strategic Partnership for Queensland Energy
APA Group (ASX, APA) has formalised a significant partnership with CS Energy to develop the Brigalow Peaking Power Plant, a 400MW gas-fired facility located adjacent to CS Energy’s Kogan Creek Power Station in Queensland. This joint development agreement marks a key step in APA’s strategy to expand its footprint in gas-powered generation, a sector critical to balancing Australia’s evolving energy mix.
Scheduled to be operational by 2028, the Brigalow plant is designed to provide firming capacity during peak electricity demand periods. This capability is increasingly vital as variable renewable energy sources like wind and solar become more prevalent but require reliable backup to ensure grid stability.
Ownership and Operational Roles
Under the agreement, APA will lead the project’s delivery through a construction management role and will acquire an 80% ownership stake upon satisfying certain conditions. CS Energy will retain a 20% interest and be responsible for operating and maintaining the plant. This division of responsibilities leverages APA’s project delivery expertise alongside CS Energy’s operational experience.
The project’s final capital expenditure remains subject to detailed engineering design, expected to conclude in the first half of 2026. GE Vernova has been appointed to supply the gas turbines, underscoring the project’s reliance on proven technology.
Financial Structure and Risk Mitigation
APA plans to fund its investment from existing balance sheet capacity, with the project forming part of its broader $2.1 billion organic growth pipeline. To mitigate exposure to wholesale electricity price volatility, APA has negotiated a 25-year hedge offtake agreement with CS Energy. This arrangement includes an inflation-linked revenue component, providing stable returns, alongside a smaller variable revenue portion that offers upside potential.
Early funding commitments by APA will support development activities until the formal acquisition of its ownership interest. A reimbursement mechanism is in place should the project not proceed to full documentation, reflecting prudent risk management.
Supporting Queensland’s Energy Transition
APA’s CEO Adam Watson highlighted the project’s role in supporting Queensland’s energy transition, noting the importance of gas-powered generation to firm renewable energy sources. The plant will connect to APA’s existing Roma Brisbane Pipeline via a new lateral pipeline, further integrating APA’s infrastructure assets in the region.
With the Queensland Government and CS Energy demonstrating leadership in renewable and supporting infrastructure development, the Brigalow project exemplifies collaborative efforts to enhance energy security and reliability along Australia’s east coast.
Market watchers will be keenly observing the progression of regulatory approvals and the finalisation of long form agreements, anticipated by mid-2026, which will set the stage for construction and eventual commissioning.
Bottom Line?
APA’s Brigalow partnership signals a strategic pivot towards gas generation as a backbone for Australia’s renewable future.
Questions in the middle?
- What will be the final capital expenditure once detailed engineering is complete?
- How will changes in wholesale electricity prices impact the variable revenue component?
- What regulatory hurdles remain before full project approval and construction can commence?
