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AGL's Bayswater power station in the NSW Hunter Valley.
(Supplied: Hunter Community Environment Centre)
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Key Points
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The joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) think thank and advisory firm Green Energy Markets attempts to quantify the mounting pressure on coal-fired plants, as a flood of cheaper and more flexible renewable power hits the grid.
The most vulnerable power stations were in NSW with concerns that sudden closures would lead to a shortfall in dispatchable electricity, unless the transition was better managed.
"The market is facing a tidal wave of new supply, much greater than anything government authorities or market analysts forecast or even contemplated just two years ago," Green Energy Markets director Tristan Edis said.
"The supply added from 2018 to 2025 equates to over a third of the entire demand in the National Electricity Market (NEM), and more than eight times the annual generation of the Liddell coal-fired power station in NSW.
"So something has got to give."Between 2018 to 2025, new wind and solar plants will add 70,000 gigawatt hours of extra supply, which is greater than the entire annual electricity consumption of New South Wales, the report said.
Prices close to zero Co-author Johanna Bowyer from IEEFA said the extra energy will lead to a collapse in output from many of the existing fossil fuel generators.
"They will be displaced because wind and solar have no fuel cost and typically bid into the market with prices close to zero," she said.
"We predict that gas power station output will fall by 78 per cent and coal output by 28 per cent by 2025 compared to 2018 levels."
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Wind turbines. (Fabrizio Bensch, file photo: Reuters) |
The Liddel power station in the NSW Hunter is already set to close in 2023, but the report said at least one more closure in the state is likely before 2025.
It listed Eraring, Vales Point and Mt Piper in NSW and Yallourn in Victoria as most vulnerable.
"What we really need to be doing is planning to replace those coal-fired power plants with something that can help balance out the wind and the solar and is really flexible, because that's the problem for coal," Mr Edis said.
He said gas could play a role in the short term, while pumped hydro and large-scale battery storage would likely be more competitive and green solutions in the long term.
"One thing is clear, that propping up coal is probably not practical, and it's certainly a very dumb idea to build new coal power plants," he said.
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An electricity tower rises into the sky. (Pexels.com) |
Snowy 2.0 will speed coal's demise 
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| The Federal Government's hydroelectricity investments will enable renewable energy to completely replace coal-fired power. Read more... |
Last week she said renewables are making coal increasingly unprofitable and warned that coal-fired power plants could close four to five years earlier than anticipated.
Under that scenario all four of the coal plants in the NSW Hunter region would be gone by 2030.
"What Kerry Schott I think is doing, is saying we need to get on top of this and manage it," the Grattan Institute's energy director, Tony Wood, said.
Mr Wood said the analysis in the IEEFA/Green Energy Markets report was on the "aggressive end", but "not at all implausible."
He said the uncertainty in the energy sector was a significant problem, in-part caused by conflicting government policies to support both renewables and traditional generators.
"The sooner we get a lot more credibility and predictability into our energy and climate policy, the sooner we'll see a reduction in what might be some potential for nasty problems," he said.
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Solar farm, Hughenden QLD. (ABC Rural: Tom Major)
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"I would go as far to say that wholesale prices are unsustainable, there will be a supply response — it's just whether it's planned or unplanned. And that's really where the market is at today," he said, while delivering Origin's mid-year results.
"I think it's actually going to be a pretty messy period of time, and I think you will see us running our generation less at Eraring. That's what you're seeing now."Origin, AGL, Neoen and CEP Energy are all planning massive battery projects in a bid to prepare for the future.
The Australian Energy Council, which represents coal, gas, hydro and renewable generators, said the wholesale energy market was seeing "major changes" as more renewables come into the system.
"That is putting added pressure on coal-fired generators in particular," AEC Chief Executive Sarah McNamara said.
"The key issues will be ensuring an orderly exit of older thermal plant, as well as investment in dispatchable generation and encouraging the right overall mix of resources and system services to maintain system security and reliability."
She said these challenges have been flagged by the Energy Security Board, which will be essential to coordinating the grid and supporting timely and efficient investments.
"Their work is made more challenging where governments impose policies outside the national market arrangements, and which can exacerbate the issues identified in this report," she said.
Links
- IEEFA Australia: Coal plant closures imminent as renewable energy surges
- Green Energy Markets: Fast Erosion of Coal Plant Profits in the National Electricity Market (pdf)
- Liddell Power Station - Wikipedia
- Eraring Power Station - Wikipedia
- Vales Point Power Station - Wikipedia
- Mount Piper Power Station - Wikipedia
- Yallourn Power Station - Wikipedia
- Companies are powering ahead with big battery projects, but a 'lack of certainty' by governments could deter good investment
- 'Well done, Angus': A truly excellent Government rescue for a crisis that isn't happening
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