Queensland coal and gas power plants slashed in value
Queensland’s state-owned energy generators have slashed the value of their coal and gas-fired power stations, dramatically decreasing returns to the state’s depleted coffers.
Queensland’s state-owned energy generators have slashed the value of their coal and gas-fired power stations, dramatically decreasing returns to the state’s depleted coffers.
The value of the coal power stations, which would have been sold off or leased under the single-term Newman LNP government’s plan to privatise state assets, has been hit by declining electricity prices caused by reduced demand because of the pandemic, increased generation from renewables and lower gas prices.
In an audit of the state’s six government energy companies, Auditor-General Brendan Worrall found coal generators Stanwell and CS Energy wrote down the value of their power stations by $720m (or 19 per cent of total assets) and $353m (15 per cent of total assets) respectively.
The coal-fired power stations are forecast to remain profitable until they are retired over the next 26 years.
CleanCo, the Palaszczuk government’s new renewables generator and retailer, reduced the value of its Swanbank E gas-fired power station to zero: Mr Worrall said CleanCo was expected to earn “net losses from running this power station until its expected retirement in 2036”.
“Due to declining electricity prices, forecasted revenues will not be sufficient to cover the increasing costs to operate the power station,” he said.
The government restarted Swanbank in late 2017 after three years in cold storage to drive down wholesale electricity prices.
Despite the grim forecast, Energy Minister Mick de Brenni said the government would not decommission any generation assets early. “Assets like Swanbank E provide important firming generation to the Queensland network, and deliver a greater benefit to system security than simply their revenue alone,” he said.
A CleanCo spokeswoman said Swanbank E’s gas-fired power station was “essential” to the new entity’s portfolio, and the value of the asset would be updated and “only increase over time” as more renewable projects came online. “(Swanbank E) allows us to provide reliable, low-emissions energy even when there is no sun or wind, and can be called upon at short notice to keep power affordable during high demand.”
Once a valuable source of income for the state, dividends from the state-owned power companies have dwindled. In 2019-20, the entities returned $1bn to the state government, down $1.2bn or 54 per cent on the previous year. In the same period, the government gave $1.5bn back to customers in rebates and concessions, including $403m for COVID-19 electricity bill relief.
CleanCo failed to meet its financial targets in its first year of trading, and did not pay the government a dividend.