Concerns over Liddell closure and taxpayer costs
The nation’s largest single electricity user, Tomago Aluminium, has voiced concern over the retirement of AGL Energy’s Liddell coal station.
The nation’s largest single electricity user, Tomago Aluminium, has voiced concern over the retirement of AGL Energy’s Liddell coal power station in NSW as doubts grow over the high cost of extending the plant.
Federal Energy Minister Angus Taylor announced in August the creation of a commonwealth-led taskforce to consider extending the life of Liddell or replacing the baseload station that supplies more than 10 per cent of the state’s power needs.
The taskforce found keeping the facility open until 2026 instead of the current 2022-23 summer exit plan would cost taxpayers $300m yet still not guarantee smooth performance, Sky News reported on Monday.
The Newcastle-based producer holds a supply contract with AGL that runs until 2028 but said it was worried about the three-year gap after Liddell closes and before the Snowy 2.0 expansion starts up in 2026.
“We do have concerns that once Liddell drops out, there are questions around where that energy comes from to replace it in the grid,” Tomago chief executive Matt Howell told The Australian.
“If we want to sustain energy-intensive manufacturing in Australia, we need thermal firming solutions after Liddell and until Snowy 2.0 is a reality.”
Independent analysis prepared for AGL in 2017 suggested it would cost $920m to extend the plant’s life by five years at a reduced 1000MW output compared with its 1680MW capacity.
The taskforce was understood to have floated the idea of keeping two of Liddell’s four generators running until 2026 for about $300m. However, AGL has indicated no appetite to commit more funds to the ageing plant after already extending its life out until early 2023, meaning any investment could lie with taxpayers.
Mr Taylor said he wouldn’t pre-empt the outcome of the Liddell taskforce and the government would consider the report’s recommendations. “As generators come to the end of their natural lives, we want to see life extension or like for like replacement. This is all about adding more supply to the electricity market whilst we ensure that the existing supply is managed very carefully.”
Spot electricity prices fell by 19 per cent to $72/MWh in the fourth quarter from the previous year.