Kogan Creek running costs at odds with Morrison estimates
The last supercritical coal-fired power plant was producing electricity for much lower than Scott Morrison has suggested.
The last supercritical coal-fired power plant built in Australia — Queensland’s Kogan Creek Power Station — was producing electricity for as little as $35 a megawatt hour in 2017, according to an industry analysis obtained by The Australian.
The estimate is well below the figures cited by Scott Morrison on Wednesday who said the cost of power generated by a new ultra-supercritical coal plant could be twice as expensive at $70-$80/MWh as power produced by older coal plants.
The Treasurer used the numbers — obtained from modelling for Treasury — to slap down a new pro-coal faction within the Coalition dubbed the “Monash Forum”, who are urging the government to spend up to $4 billion on a new “Hazelwood 2.0” clean coal-fired power plant in the Latrobe Valley.
Liberal MP Kevin Andrews, who wrote the Monash Forum’s foundational document, last night said the ginger group would not change its name despite protests from the descendants of the World War I hero who helped open up Victoria’s Latrobe Valley.
“Who else would we call it after? John Monash was a great engineer, a great contributor to Australia,” Mr Andrews told Sky News. “The Australian taxpayer is spending billions of dollars on subsidies for renewable energy, there are talks about the taxpayer now spending billions of dollars on Snowy 2.0, so there is no pure market, there is no level playing field”.
While Mr Morrison this week called out the high costs of power from new HELE coal plants, The Australian has obtained an industry analysis based on a “Fuel and Technology Cost Review” conducted by ACIL Allen Consulting in 2014 for the Australian Energy Market Operator.
It suggests that, 10 years after it was opened in 2007, the Kogan Creek plant, one of only four supercritical plants operating in Australia, was producing cheap power at about $35/MWh.
The analysis estimated the cost of recouping capital expenditure was about $15.60/MWh while fuel costs were put at $8.0/MWh. Fixed operational and maintenance costs were put at $6.80/MWh while variable operational and maintenance costs were put at $0.50/MWh. The cost of tax paid to the state government was put at $4.10/MWh.
A separate 2017 analysis from Solstice Development Services and GHD concluded a HELE plant built in NSW’s Hunter Valley would cost $2.2bn and deliver electricity at about $59/MWh.
The Australian asked CS Energy for the cost of power generation at the Kogan Creek power station, but it said this information could not be provided for “commercial in confidence” reasons.
Resources Minister Matt Canavan told The Australian yesterday that “all of the analysis before the government shows that coal-fired power is the cheapest way of producing reliable electricity”.
However, he refused to back the core demand of the “Monash Forum” which is urging the government to invest up to $4bn in the construction of a new “Hazelwood 2.0” coal-fired power station in Victoria’s Latrobe Valley.
Additional reporting: Greg Brown