APA Group (ASX: APA) Commits $1.015 Billion to Brigalow Power Plant

APA Group has finalised agreements with CS Energy to acquire an 80% interest in the Brigalow Peaking Power Plant, committing approximately $1.015 billion to the Queensland project from its existing balance sheet capacity.

The 400-megawatt gas-fired plant is expected to cost $1.269 billion in total and is targeted for completion in early 2029. CS Energy will retain the remaining 20% interest and operate and maintain the facility once construction is complete.

For APA, the deal adds a large contracted power-generation investment to its $3.5 billion organic growth pipeline. The company will also lead delivery of Brigalow under a construction management agreement, giving it a central role in bringing the project into operation.

Long-term contract limits power-price exposure

The project’s returns will be supported by an inflation-linked, 25-year hedge offtake agreement with CS Energy. APA said this arrangement would limit its exposure to wholesale electricity prices associated with operating the plant, although a small portion of revenue will remain variable.

That commercial structure is an important feature of the investment. Brigalow is designed to generate predominantly contracted revenue over an extended period rather than relying primarily on movements in wholesale power prices.

APA expects the project to deliver returns consistent with its investment hurdle rates, though the announcement did not disclose a specific return forecast.

Brigalow will provide fast-start, dispatchable generation designed to operate when required alongside variable renewable energy. APA said the plant would have sufficient capacity to supply the equivalent of more than 150,000 homes.

The facility will be built next to CS Energy’s Kogan Creek Power Station near Chinchilla. APA is separately delivering a gas lateral and storage pipeline to connect Brigalow with its Roma to Brisbane Pipeline under another agreement with CS Energy.

Main construction moving forward

Early works have been completed, while GE Vernova is delivering the gas turbines. Monadelphous, appointed as the balance-of-plant contractor, is progressing the main construction works.

The early-2029 completion target means the project will require several years of capital deployment before entering operation. APA’s contribution represents most of the expected project cost, reflecting its 80% ownership position, while CS Energy’s continuing stake aligns the plant operator with the asset’s performance.

APA Chief Executive and Managing Director Adam Watson said the project supported the group’s contracted power-generation strategy across Australia’s east and west coasts.

The investment broadens APA’s electricity-generation exposure while remaining connected to its established gas infrastructure. The group owns and operates more than $20 billion of energy assets, including gas pipelines, processing, compression and storage facilities, as well as power generation, battery storage and electricity transmission infrastructure.