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UPDATE 1-Engie, Mitsui sell Australian coal-fired power plant to Alinta -source

-source@

* Alinta bid against China Resources Power, Delta

* Price tag well above some analyst estimates

* Coal-fired plants seen valuable for cheap, stable supply (Adds Engie comment, background on coal-fired power)

MELBOURNE, Nov 23 (Reuters) - Engie and Mitsui have agreed to sell their Loy Yang B coal-fired power station in Australia to Chinese-owned Alinta Energy for more than A$1.1 billion ($835 million), a person familiar with the deal said on Thursday.

An Engie spokesman declined to comment on the price tag, first reported by the Australian Financial Review, but said an announcement would be made later in the day.

Alinta Energy, owned by Chow Tai Fook Enterprises (CTFE), was competing with offers from China Resources Power Holdings Co and privately owned Australian firm Delta Electricity backed by private equity firm Apollo Management.

Alinta Energy and CTFE were not immediately available for comment.

France's Engie and Japan's Mitsui put Loy Yang B up for sale a year ago, at the same time that Engie decided to close its nearby Hazelwood coal-fired plant as part of a push to get out of fossil fuel-fired power.

Loy Yang B, a 953-megawatt plant, is the newest and most efficient coal-fired generator in the state of Victoria, which is facing tight power supply in the wake of the closure of the bigger Hazelwood plant.

Estimates on the value of Loy Yang B varied widely, with one analyst having seen it worth around A$330 million based on prices that Australia's top generator, AGL Energy, paid for the larger, neighboring Loy Yang A plant in 2012 and another, Bayswater, in 2014.

Power prices have surged since those deals due to the closure of other coal-fired power plants which has created a shortfall of stable power to back up wind energy and made coal- and gas-fired plants more valuable.

A plan by Australia's conservative government to require energy retailers to meet targets for reliable supply could also boost demand for coal-fired power, at least until utility-scale batteries become more affordable and natural gas prices fall.

(Reporting by Sonali Paul; Editing by Richard Pullin and Joseph Radford)