QPM’s Macquarie funding  shows cheque books are opening for east coast energy

• Rising demand and coal plant closures could open wallets for new east coast energy projects
• Macquarie Bank providing $113.7m in funding to QPM Energy’s Issac Power Station is a notable example
• Power station just the first stage in larger Issac Energy Hub that will deliver power to Queensland

Timing is, as they say, everything. And when that timing is for something as critical as power generation, being able to bring generation capacity in time to meet demand is hugely valuable.

Such a tale is likely in Queensland with the ageing Gladstone power station in central Queensland facing the likelihood of closing in 2029, up to six years earlier than its originally scheduled retirement in 2035.

This has the potential to leave a glaring gap in the state’s electricity generation capacity since the coal-fired plant is its largest with a capacity of 1680 megawatts.

While Rio Tinto, the operator of the plant, has secured some 3 gigawatts (3000MW) of renewable power capacity to replace this power, which is used primarily for the nearby Boyne aluminium smelter, its variability might not allow the smelter to be run safely.

The decision to potentially close Gladstone early also raises the question of just how long the government can keep state-owned coal-fired power stations operating .

This is despite its introducing a $1.6 billion investment to keep such assets – along with hydro and gas plants – operating as long as needed into the future under the Queensland Energy Roadmap 2025.

That’s not to say there aren’t any new energy projects that can fill the gap.

One notable example is the proposed 400MW Brigalow peaking gas-plant announced in the Energy Roadmap, gas supplies that have been secured under an agreement with Gina Rinehart-backed Senex Energy.

The state has also flagged that up to 6.8GW of additional wind and solar is anticipated to become operational by 2030 and a further 4.4 GW by 2035.

However, while these projects – both gas and renewable –could further close the gap, rising electricity demand and the prospect that other coal-fired plants might close means that additional generation capacity will still be welcome.

Welcome news

This is welcome news indeed for companies such as QPM Energy (ASX:QPM)  that are developing new electricity generation capacity as they will likely have little difficulty finding buyers.

Even if Queensland finds itself with a glut of electricity generation, the interconnected nature of the National Electricity Market across the entire eastern coast of Australia means that excess electricity can be transmitted to energy hungry New South Wales and Victoria.

It is this knowledge that likely provided Macquarie Bank with the confidence to sign off on a $113.7m master lease agreement to QPM.

The funding allows the company to acquire two LM6000 gas turbines, which are suitable for both base load and peaking generation,

Additionally, the turbines are capable of operating on non-pipeline spec gas such as waste coal mine gas that cannot be fed into the North Queensland Gas Pipeline, from GE Vernova.

These turbines are already the subject of a fixed-price contract that will allow QPM to meet the planned mid-2027 commissioning target for its 112 megawatt Isaac power station in Moranbah, avoiding the procurement lead times for gas turbines that have blown out to five to seven years.

Economics are compelling with the feasibility study estimating the Issac Power Station could generate annual revenue of $71.4m to generate average annual EBITDA of $49.2m.

Unlevered net present value at a 10% discount and internal rate of return are forecast at $196.4m and 20.3% respectively.

Costs are expected to be amongst the lowest for gas-powered generation in Queensland with QPM flagging that electricity prices are expected to increase over the near to medium term due to the accelerated transition away from base load coal fired power generation.

This will in turn deliver improved returns.

Issac marks the first stage of the company’s planned Isaac Energy Hub that will leverage its proved and probable (2P) gas reserves of 435 petajoules and current production of 25-30 terajoules per day (11PJ per year from its Moranbah gas project.

The gas project includes extensive gas gathering, processing and compression infrastructure that has the capacity to handle 64TJ/day, leaving plenty of room for growth.

Adding further interest, just 55PJ of the company’s 2P reserves are contracted with another 85.2PJ under option.

This leaves a hefty 294.8PJ available for use in further power generation or other uses.

Further development of the Issac Energy Hub could see incremental increases in generation capacity up to +300MW along with up to 100MW, four-hour duration battery energy storage.

QPM also owns the dispatch rights for the 160MW Townsville and 12.8MW Moranbah power stations that generated $49.5m and $3m in revenue respectively during FY2025.

Funding availability

Macquarie’s willingness to provide funding for QPM’s Issac Power Station is also a potential sign that financiers are open to funding further east coast energy projects.

The ongoing push towards electrification, the projected gas crunch in southern states and growing energy demand all combine to ensure that new sources of energy will find ready buyers.

This in turns provides a clear guarantee of robust returns, which in turn provides the certainty that opens up wallets.

At Stockhead, we tell it like it is. While QPM Energy is a Stockhead advertiser, it did not sponsor this article.