Cheap renewables put old coal power plants to test
Australia’s largest coal plant is facing its biggest test yet, prompting a radical rethink of its operation.
Australia’s largest coal plant is facing its biggest test yet: cheap renewable energy.
The Eraring power station on the shores of NSW’s Lake Macquarie supplies 20 per cent of the state’s daily consumption, helping to keep the lights on after ageing coal facilities like Victoria’s Hazelwood were mothballed in 2017.
But nearly four decades into its life, owner Origin Energy is contemplating a radical rethink of the way Eraring feeds electricity into the east coast’s grid, including shutting the facility down during the day when huge slabs of solar often beat coal on price.
Traditionally the country’s big coal generators run round the clock, reflecting both market demand for the fuel but also the difficulty in tweaking output from huge pieces of machinery that can take hours to properly synchronise with the grid.
But the relentless surge of cheap and plentiful renewables — solar, wind and hydro and battery storage — is sparking a shift among the big baseload coal producers that supply 70 per cent of the grid’s needs.
Origin estimates 2800 megawatts of clean energy made its way into the grid in 2018, representing the same annual capacity Eraring can produce.
But whereas once Origin may have ploughed on running the plant through the day and night, the ability of solar to cut wholesale prices during the day means Eraring may make a better return ramping its output up and down to meet peak demand.
“Solar is now the lowest cost form of generation and it will create an oversupply situation during the day,” Origin’s Eraring operations manager Tony Phillips told The Weekend Australian on a tour of the plant.
“That surplus energy will mean that we may likely back off and it could even mean that we shut down for periods during the day. It’s a commercial decision — if the price gets to a point where it’s sensible to do — we will make that decision.”
Making that call may come sooner than originally thought for Origin and rivals AGL Energy, EnergyAustralia and Alinta.
A likely tipping point for Eraring to pare output is when wholesale power prices fall below $50 a megawatt hour during the day on a consistent basis.
Origin already estimates solar can supply into the grid for between $40-$50/MWh, albeit on an intermittent basis, with costs higher once storage options like batteries or hydro are baked into the equation.
“There’s still a lot of uncertainty, but it’s possible we change the way we operate Eraring within two years,” Phillips says.
“It may be much longer. But for us, it’s about being ready when it happens.”
Origin has just completed a trial shutting down one of its four Eraring generators after meeting morning demand and firing it back up to meet evening peaks.
Still, after running the mega plant much the same way since it opened in 1982, running a coal generator more flexibly is no small feat. Unlike quick-start gas plants which are designed to fill gaps in the grid, the complex interplay between coal boilers, pipes, cooling towers and turbines pose a challenge for Eraring.
“It’s a totally different operating model,” Phillips says. “If you look at the valves and dampers and equipment out there, that traditionally sits in one spot and never moves. Now we’re asking it to move up and down and this sort of equipment can jam, get stuck, doesn’t operate, gets fatigued and generally wears out.
“The tests were designed to look at reliability issues to ensure that when the time comes we can do this day, in day out or, if needed, a few times a week.”
The retooled strategy for Eraring reflects a pragmatic response to a renewables transition which shows no sign of slowing down, according to expert Tony Wood, energy program director at the Grattan Institute. “It reflects the way these coal plants are going to be running. They’re soon going to be operating in a different world if they’re not already and they need to adapt to that.”
To be sure, attempting to apply that level of flexibility may be out of reach for less modern plants already grappling with debilitating breakdowns. During the January heatwave the lost output from three ageing coal plants contributed to rolling outages in Victoria.
Moving Australia’s coal plant fleet to so-called “two shift” operations that Eraring is considering poses a raft of challenges, Wood says. “One of the potential problems is, if you do this with older plants it can actually make them worse in that they can become less stable and less efficient in burning coal, which can mean they produce even more emissions.”
Despite the huge strides made by renewables, clean energy still only accounts for 20 per cent of Australia’s electricity generation and mapping the future generation mix of the country’s energy grid over the next few years remains highly uncertain.
The next big jolt to the grid could be when AGL’s Liddell coal plant exits in 2022, stripping 1800MW of supply and potentially creating another Hazelwood-type shock to the market if not handled with care.
AGL is planning a raft of replacement generation through gas and renewables but for Origin, it means being prepared to step in and run near full capacity if required while at the same time preparing for a reduced role during the day in the long run.
“Coal will obviously be important through the transition. No one argues that renewables is a better solution. So it’s really about getting there in the right time frame and making sure we don’t go too quick and end up with reliability issues,” Phillips says.
The Eraring chief doesn’t yet count the exit of Liddell as a foregone conclusion, but says if it does happen the NSW plant will have plenty of grunt left ahead of its own eventual retirement in 2032.
The exit of Liddell “is likely to reset the National Electricity Market, so other generators will pick up some of that gap depending on how much renewables comes into the market. That’s likely to be picked up by remaining coal fired generators in the short term but could also be picked up by gas. That’s part of the challenge,” he says.
In the meantime, Eraring will concentrate on its job as the biggest power station in the country.
“We understand the journey to renewables and everyone wants to get there,” Phillips says. “It’s just about it doing it sensibly and responsibly and we just have to work out our role in that transition. In the meantime, we’ll focus on Eraring continuing to be a big generator in the market and keeping the lights on for a long time to come.”
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