Commercial pressure is growing on the giant coal-fired power stations supplying most of Victoria’s electricity, as experts warn of the increased likelihood of early closure at some Latrobe Valley mines and stations.
A surge of renewables into the power market has driven prices to a seven-year low and is increasingly undercutting the profitability of the Loy Yang and Yallourn plants, which the state government has described as “unreliable and ageing”.
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Steam billows from the cooling towers at the Loy Yang A coal-fired
power station in the Latrobe Valley. Credit: Bloomberg |
But the companies that run Loy Yang A, Loy Yang B and Yallourn, which together employ up to 1200 workers and contractors, said their long-term plans for the plant have not changed despite one senior executive referring to a changing “operating environment”.
AGL, which owns Loy Yang A and its adjacent coal mine, shocked the markets this month with a $2.7 billion write-down, blamed in part on falling wholesale electricity prices.
Schneider Electric energy markets director Lisa Zembrodt said coal generation operations were being squeezed on both the supply and demand sides.
“Coal is going to continue to face pressure,” Ms Zembrodt said.
“On the supply side, they’re being squeezed out by the growth in renewable capacity and output.
“Demand is declining as people put solar ... on their roofs and larger end users get smarter in the way they consume or perform energy efficiency projects.”
Ms Zembrodt also said the carbon intensity of the brown coal used by the Latrobe Valley stations, which are responsible for 40 per cent of Victoria’s emissions, would become increasingly problematic.
Plume modelling of pollution from coal-fired power stations in Victoria, based on atmospheric observations and industry data using CALPUFF. Supplied: Greenpeace
Victoria University energy expert Bruce Mountain told The Age that recent events showed brown coal generation was in trouble and the challenge for the state government was to ensure enough alternative power sources were available to replace the enormous capacity of the three Latrobe Valley stations.
“On brown coal closure, the odds are shortening on it happening sooner rather than later,” Professor Mountain said.
“State governments need to get their skates on.
“It’s not panic stations, but the thrust of government policy must be to bring in alternative sources quickly.”
Victoria’s Environment Minister Lily D’Ambrosio last week launched the latest phase in the state’s $540 million effort to reboot its electricity grid. The system was originally designed around large-scale coal stations and has struggled to accommodate all the renewables projects waiting to connect.
“When we’re done, Victoria’s renewable energy zones will be home to 16 gigawatts of capacity – the equivalent of putting solar on every roof in Victoria,” Ms D’Ambrosio said.
“As our ageing coal-fired generators reach the end of their service lives, our long-term climate and energy targets provide the market with much-needed certainty to enable a well-planned transition to clean energy.”
Alinta chief executive Jeff Dimery said the company’s Loy Yang B plant was the youngest and most efficient brown coal power station in the Latrobe Valley and there were no plans to change its official 2037 closure date.
“While our plans haven’t changed, the operating environment has, and will continue to change, as we move towards a lower-carbon future,” Mr Dimery said.
“If the situation changes and we have any concerns about our ability to keep the station running, we’ll be up front about it.”
An AGL spokesperson said the write-down had not altered its plans to close Loy Yang A in 2048. An EnergyAustralia spokesman said the company had promised at least five years’ notice of any closure of its Yallourn plant and that it would keep its word.
Links
- ‘Dirty and dangerous’: AGL tops list of coal-fired plant breaches
- Conditions ‘remain challenging’ as AGL swings to $2.3b loss
- Push for deeper cuts as Victorian emissions sink to lowest level in decades
- Move to build grid-scale solar on industrial rooftops across Australia
- 'From sunny north to windy east': What are Victoria's renewable energy zones?
- 'Overheating our planet': Andrews government urged to set emissions target for critical decade
- Victorian coal-fired power review conclusion prompts calls for emissions limits in Latrobe Valley
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