Victoria is a step closer to a new brown-coal power plant after a Chinese company announced it had won a contract to build a long-delayed $750 million station in the Latrobe Valley.
The state-owned China National Electric Equipment Corporation said it expected to sign a contract with Melbourne-based HRL on April 22 to build a demonstration plant that would use new technology to run on low-grade coal.
The announcement, in the China Daily newspaper, follows several false starts for the Morwell plant, which is backed by $100 million federal and $50 million state funding.
Having promised to start operating in 2009 using a coal drying and gasification technique said to cut greenhouse gas emissions by 30 per cent, HRL had problems raising finance for the plant amid uncertainty over the proposed emissions trading scheme.
Chinese manufacturer Harbin Power withdrew its 50 per cent stake in the project last year. Around the same time HRL rebranded the controversial plant, dropping ''clean coal'' and adopting ''dual gas''.
China National Electric Equipment Corporation president Zhao Ruolin said the coal-fired station could be a major breakthrough in power generation. He did not mention gas.
''Coal is a one-off energy source and at present only the high-grade variety is used. By using the low-grade variety, we can extend the life of coal,'' he told the China Daily.
HRL, formerly the publicly owned Herman Research Laboratories, did not respond to requests for comment.