Liddell Power Station closure to expose ‘fragility’ of power grid: Minerals Council
The power grid faces further tightening once AGL’s Liddell coal-fired power station closes, the Minerals Council has warned.
Australia’s power grid faces further tightening and price hikes once AGL Energy’s Liddell coal-fired power station closes with insufficient baseload supply in place to fill the gap, the Minerals Council of Australia has warned.
AGL (AGL), the nation’s largest electricity generator, plans to shut the 2000 megawatt Liddell plant in 2022.
The previous Turnbull government — concerned its exit would create a shortfall in reliable energy supply — unsuccessfully campaigned to either extend its retirement date or sell the facility to another operator.
The mining lobby group said the focus of the federal government’s proposal to underwrite new power generation should be replacing the capacity and output that will be lost with Liddell’s closure given the facility accounts for 10 per cent of NSW demand.
“The Minerals Council is concerned the close of Liddell Power Station will expose the fragility of the power supply system in NSW,” said the group whose members include EnergyAustralia, BHP and Rio Tinto. “Its removal will make a tight market for dispatchable power even tighter in this state. There are currently no investments being considered which are capable of replacing that level of 24/7 power output prior to 2022.”
AGL plans to convert existing generators and add batteries and pumped hydro on the site at Lake Liddell to improve the reliability of variable wind and solar generation and drive the development of more renewable energy sources across the market. Demand response and high-efficiency gas peaking plants are also planned as part of a $1.36 billion deal which will bring some new supply online ahead of Liddell’s retirement.
However, the Minerals Council warns wholesale power prices are already rising over the generation shortfall.
“Future baseload prices in 2022 are already rising in Queensland and Victoria. However the biggest increase is in NSW, where future prices jump almost 37 per cent from December 2020 to June 2022,” the group says in its submission to the government’s underwriting new generation scheme currently under consideration.
It urges the government to focus on generation responses to the Liddell issue even it that effectively means government intervention in the sector.
“Policy interventions by successive federal and state governments have distorted market signals and led to increased prices and reduced reliability,” the Minerals Council said. “While the Underwriting New Generation Investment policy is government intervention, the MCA considers this necessary to address what is now clearly an unmanageable investment risk which is undermining the supply of low cost and reliable power.”
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