Factories evacuated, road closed due to threat of explosion at Tomago industrial site
A 400-metre exclusion zone has been set up around an energy plant at Tomago in Port Stephens, which authorities say is at risk of exploding.
Emergency services were called to energy storage company MGA Thermal around 5.20am today.
Fire and Rescue NSW said there was a "dangerous heat build-up" in a machine inside a warehouse, which was designed to store heat as a power source.
Heat readings detected smoke in power cables but there was no fire.
Three staff and 15 surrounding businesses were evacuated as a precaution.
There are no reports of injuries.
"Firefighters have found a heat exchange plant during its commissioning phase has overheated from 700 degrees to around 1,200 degrees," Superintendent Scott Dodson said.
"One of the complexities of the incident is that it will react with water, which has caused Fire and Rescue to set up an exclusion zone of 400 metres."
It was the first time in Australia that this type of machinery had overheated.
"We haven't seen anything like this before but the company managing it has been excellent in supporting Fire and Rescue with engineering staff to help bring this incident to a close," Superintendent Dodson said.
"This will be a protracted incident; it could go until the end of the day or possibly tomorrow.
"We are hoping to reopen roads in the area once we get some more information."
In a statement, MGA Thermal said the industrial machinery was part of its demonstration unit.
"We are working closely with emergency services to ensure any risk is contained, and all personnel in the surrounding area are evacuated and safe," a spokesperson said.
"We have been alerted by authorities that the exclusion zone is being reduced and risk is being downgraded, but we are closely monitoring the situation for any potential changes."
The plant received a $1.3 million grant from the state government and was toured by the Minister for Climate Change and Energy, Chris Bowen, last year.
Crews are working to cool down the machine and reduce the threat of explosion by introducing nitrogen into the system.
Five fire trucks, including the hazardous materials unit, an aerial platform, and a bulk carbon dioxide tanker are at the scene.
Fire and Rescue NSW said it would work with the Environment Protection Authority (EPA) and SafeWork NSW to investigate the incident. 
Tomago Road is closed in both directions between Old Punt Road and McIntrye Road.
Motorists are being urged to avoid the area.
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