Snowy Hydro, the government-owned company behind a new gas-fired power plant at Kurri Kurri, says this week's Queensland blackout shows why the $600 million Hunter project is necessary.
An explosion at Queensland's Callide Power Station on Tuesday led to a blackout of more than 470,000 customers for several hours.
Snowy Hydro boss Paul Broad told a senate estimates hearing on Tuesday evening that the "penetration of renewables" into the power grid was "unstoppable", but peaking plants such as that planned for Kurri Kurri were needed to manage "risks" such as the Callide explosion.
"It's happening in Queensland right now," Mr Broad said.
"There are 400,000 properties without power right now. There is a hospital running on emergency diesel right now.
"This is deadly serious to people in serious predicaments.
"We sit here today, and, let me tell you, I spend my life thinking about this."
He said the firming capacity needed to back up renewable energy was "on a scale hard to even comprehend".
Energy Minister Angus Taylor announced last week that the government would spend $600 million via Snowy Hydro on the Kurri Kurri plant plus another $200 million to extend the Sydney-Newcastle gas pipeline.
Energy analysts and Energy Security Board chair Kerry Schott have questioned whether the Kurri Kurri plant is necessary as more renewables and green firming technology enter the market.
The government says the plant will be crucial to securing affordable power prices when Liddell coal-fired power station closes in 2023.
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Greens senator Larissa Waters said at the senate estimates hearing that her party did not agree that fossil fuels were "the way to go" as a back-up energy source.
Mr Broad said he had excluded himself from talks over buying the Kurri Kurri site because he had been involved in past land negotiations with Snowy when he was chairman of Hunter Development Corporation.
Labor senator Tony Sheldon questioned Mr Broad about his relationship with former Newcastle lord mayor Jeff McCloy, who has a heads of agreement with fellow property developer John Stevens to buy the site before selling it to Snowy Hydro.
Mr Broad said he had known Mr McCloy since they were at university together 40 years ago but had handed responsibility for the land negotiation to Snowy executive Cesilia Kim.
He said he was aware via press reports of ICAC findings in 2016 that Mr McCloy had made illegal donations to Liberal party candidates before the 2011 election.
He said Snowy had been interested in the Kurri Kurri site "well before" Mr McCloy and Mr Stevens had secured an interest in the land in March last year.
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