Renewables ‘pulling plug on coal’
Australia’s coal plants are increasingly becoming uneconomical and are operating at razor-thin margins.
Australia’s coal plants are increasingly becoming uneconomical and are operating at razor-thin margins amid big falls in wholesale power prices as more renewables enter the electricity grid, the nation’s energy tsar Kerry Schott says.
“The coal plants are really struggling to make any money because they’re only being dispatched for a small number of hours a day,” Ms Schott, chair of the federal government’s Energy Security Board, told a Clean Energy Council forum on Thursday.
Reductions in power prices to a $40 a megawatt hour range would challenge the ability of some coal plants to bid in supply in the national electricity market.
“Some of them would be struggling to get coal less than that price which they need to generate a megawatt, so they are really headed into quite commercially difficult territory.”
Ms Schott said the closure of coal plants loomed as a serious problem for the power grid, given issues integrating new supplies into the market.
“We do need to tackle the coal closure problem, which I think of more as a new entry problem rather than a coal closure problem. So how do we get the essential services that we need and how do we get the capacity that we need as they go? And it’s about dispatchability and valuing the services we need.”
Black coal output fell by a whopping 1148MW in the June quarter from a year earlier, with the nation’s largest coal facility, Origin Energy’s Eraring plant, recording its lowest second-quarter generation since 2013 as it was undercut by solar, wind and brown coal-fired supplies, the Australian Energy Market Operator reported on Wednesday.
That meant it was operating close to minimum generation levels of just 180MW, less than 10 per cent of capacity, more frequently due to low spot prices.
Coal accounts for about 70 per cent of electricity in the power grid, but AEMO forecasts 63 per cent, or 15GW, of coal-fired generation will retire by 2040.
That means more than 30GW of new large-scale renewable energy needs to be added, which represents more than half the current capacity of the national electricity market, posing a new challenge given recent grid connection issues and a slowdown in clean-energy investment.
AEMO warns a plant like EnergyAustralia’s Yallourn station could be forced out of the system as early as 2026 compared with its 2032 retirement date, based on Victorian government renewable and emissions targets which threaten the viability of baseload generation.
More Coverage
