The closure of another coal-fired power station has raised fears it could drive up power bills and lead to more blackouts.
EnergyAustralia announced on Wednesday the Yalloun Power Station in Victoria will be closed in mid-2028, instead of 2032. The plant currently supplies up to 22 per cent of the state’s electricity and 8 per cent of the national market.
The company has said it will also build the largest battery in the world in the Latrobe Valley by 2026 with a capacity of 350MW, to replace some of the plant’s 1480 MW capacity.
But Energy Minister Angus Taylor said more dispatchable capacity must be added to the market. The government has previously threatened to step in and build its own facilities if the private sector does not act.
“We want to see … that customers are properly looked after, and we get the affordability and reliability that all Australians deserve and the people of Victoria deserve,” Mr Taylor told Sky News.
However, the closure has been welcomed by environment groups, who say that all coal-burning power stations needed to close by 2030 in order to avoid the worst impacts of climate change.
Australia Institute climate and energy program director Richie Merzian said it was no surprise Yalloun was being closed early.
“It’s the oldest power station in Victoria,” he said.
“Our analysis of the electricity sector found it was the most heavily polluting in the country and it has broken down 50 times since December 2017.
“It’s a good thing it’s closing a bit early. What is surprising is that it’s not closing even earlier than that because it’s not reliable and we no longer need coal-fired power to provide consistent baseload supply.
“Victoria, NSW, almost every state, is bringing on new renewable electricity that will fill that gap.”
A report released last month by the Institute for Energy Economics and Financial Analysis, and Green Energy Markets, predicted coal-fired power stations in Australia would confront “grave financial difficulties within the next five years due to extra competition from a large influx of renewable energy supply”.
Coal is finding it increasingly difficult to compete with the near-free influx of solar energy in the middle of the day.
The report suggests the financial viability of several coal generators would become “severely compromised” by 2025, and closing would become an attractive or even unavoidable choice.
Renewables are forecast to provide 40-50 per cent of National Energy Market demand by 2025.
“The additional renewable energy generation coming online from 2018 to 2025 will be enough to supply 99.9 per cent of the Australian Energy Market Operator’s (AEMO) expected demand growth and 98 per cent of the gap expected to be left from the Liddell power station retirement,” the report states.
“Even after filling the demand growth and Liddell gap there will be surplus renewable generation of approximately 57,000GWh.”
Mr Merzian said the transition to renewables was happening, and battery and other technology would fill the gap of dispatchable electricity.
“The grid can accommodate the closure, including the early closure of coal-fired power stations. This is what the state governments have been planning for, for the last few years,” he said.
“No one will build new coal-fired power unless government pays for the entire thing and that will be a massive waste of taxpayers’ money.
“That’s why every state and territory is building new batteries.”
He noted a NSW roadmap acknowledged three quarters of the state’s coal-fired electricity supply was expected to reach the end of its technical life within 15 years.
While Prime Minister Scott Morrison has spruiked a gas-led recovery for Australia, Mr Merzian said this was not the solution as it could be as high polluting as coal.
“Secondly, the experience on the east coast is that gas makes electricity more expensive,” he said.
“Gas production on the east coast tripled in the last 10 years and yet gas prices went up.
“Gas is not the solution, it’s part of the problem and we need a climate and energy plan that provides a clean energy transition at a federal level.”