Australia Backs Tomago Smelter With $2.5B Power Deal

• AUD 2.5B backs Tomago Aluminium in NSW—protecting 1,000 direct jobs—while funding 3GW of renewables, firming power and a fully renewable supply from 2033.

Australia and New South Wales have unveiled an AUD 2.5 billion support package for the Tomago aluminium smelter, designed to secure the site’s future while accelerating the energy transition. The deal is expected to underpin nearly 3 GW of new renewable generation and associated firming capacity in coming years.

Tomago Aluminium will invest AUD 1.1 billion through 2038, including AUD 100 million for decarbonisation efforts. A new power purchase agreement will start after its existing electricity contract with AGL ends on December 31, 2028, with the supplied power expected to become fully renewable by 2033. The governments say the package will help preserve 1,000 direct jobs and about 5,000 indirect jobs across the Hunter region.

How will Australia’s AUD 2.5B Tomago deal accelerate renewables and firming?

• Provides bankable offtake and financing signals that improve project certainty for large-scale renewable deployment linked to an industrial anchor load at Tomago.
  
• Shifts a major, long-duration industrial electricity demand from legacy supply to clean power through a new long-term purchase arrangement starting after 2028, tightening the timetable for renewables delivery.
  
• Drives construction of roughly 3 GW of new renewable generation by tying capacity growth to a committed, system-relevant demand source rather than relying only on merchant market conditions.
  
• Includes “firming” alongside renewables so the grid can meet industrial reliability needs during low-wind/low-solar periods—supporting technologies such as grid-scale batteries, pumped hydro, dispatchable renewable options, and other balancing resources.
  
• Encourages faster grid planning and connection outcomes in the Hunter region by creating coordinated demand and generation requirements, which typically reduces delays from feasibility studies, interconnection queues, and permitting bottlenecks.
  
• Strengthens the role of dispatchability and network flexibility in the transition by funding or enabling complementary firming capacity that can support higher renewable penetration.
• Improves transition credibility for investors and lenders by structuring the support so generation and firming resources can be procured and scheduled to align with the smelter’s electricity contract rollover.
  
• Supports decarbonisation planning at the facility level (including allocated decarbonisation investment), helping align industrial emissions targets with the availability of clean electricity and firming capacity.
  
• Creates an industrial demand–renewables partnership model that can be replicated for other heavy users, accelerating broader deployment beyond one site by demonstrating a workable transition pathway.
• Helps maintain economic stability for the region’s workforce while renewables and reliability upgrades scale up, reducing transition risk that can otherwise slow delivery of grid and generation projects.