Government demands more notice of coal power plant closure under proposed rule change

In a bid to prevent an electricity shortfall, the government is set to change the rules for energy companies intending to switch off their coal fired power stations.

Energy companies would be forced to give at least five years notice before closing a coal-fired power station under a proposed rule change to avoid the shock of sudden shut downs exposing Australia to an electricity shortfall.

Industry, Energy and Emissions Reduction Minister Angus Taylor has written to the Australian Energy Market Commission to ask for a change to the National Electricity Rules to extend the notice period from 3.5 years to a minimum of five year to give the sector enough time to build new projects to replace exiting capacity.

“If accepted, the rule change will … prevent potential gaming of notice of closure requirements by market participants,” he said.

“Without this rule change, there is a risk that retiring capacity is not replaced in time or is only able to be replaced with inadequate or inefficient options that are available in short time frames, risking the reliability, affordability and security of the system.”

Mr Taylor said the rule change was about “putting the interests of energy consumers first”.

Liddell Power Station will be entirely shut down by this time next year.

The rule change would not impact planned closures of AGL’s Liddell coal-fired power station, or the more recently announced shut down of Origin Energy’s Eraring plant, but it would apply to others in the NSW expected to close in coming years.

AGL has indicated it plans to bring forward the closure of its Bayswater coal fired power station to sometime between 2030-33.

Energy Minister Angus Taylor hopes the rule change will prevent an electricity shortfall. Picture: NCA NewsWire / Gary Ramage

The government has also reached an $75.8 million underwriting agreement with Transgrid for the early works on the proposed Victoria to NSW Interconnector West, which is expected to deliver an additional 1,800MW of capacity between the two states, particularly unlocking the benefits of Snowy 2.0 on-demand.

Mr Taylor said targeted action to support VNI West would ensure NSW residents had ongoing access to reliable and affordable power.

“We are investing in VNI West because it is expected to generate $1.9 billion in net market benefits and will be a key part of an efficient transmission backbone for the electricity market,” he said.

“Our investment in this project will support reliable electricity supply, deliver substantial cost savings and help keep the lights on for Australian families, businesses and industries.”

Originally published as Government demands more notice of coal power plant closure under proposed rule change