Scott Morrison slaps down Monash coal pipedream
Scott Morrison says electricity from new ‘high-efficiency, low-emissions’ coal plants costs twice as much as from old generators.
Scott Morrison has slapped down the Coalition’s coal faction, warning that electricity from new “high-efficiency, low-emissions” coal plants costs twice as much as power from generators built in the past.
As the Coalition’s pro-coal Monash Forum agitates for a $4 billion taxpayer-funded HELE coal plant, the Treasurer declared the days of cheap coal were over.
He said “old coal” was being bought in the national energy market for $30-$40 per megawatt hour, while electricity from a new HELE plant was worth $70-$80/MWh.
“There is a difference between old coal and new coal,” he told the AFR Banking and Wealth Summit. “It is false to think that a new coal-fired power station will generate electricity at the same price as old coal-fired power stations for the obvious reason that the asset has already been written off.
“You don’t just open up one down the road and all of a sudden it is producing power at the same price as Bayswater or any of the others. That is just not an economic fact.”
The price comparisons are based on modelling for Treasury by ACIL Allen Consulting, which put the wholesale cost of HELE coal with carbon capture and storage technology at $140-$190/MWh.
Energy Minister Josh Frydenberg said coal plants were “very capital-intensive assets”, and electricity from old coal plants was cheaper because the plants were fully depreciated assets.
He said coal was also competing in a market where the price of renewable energy stood at about $60/MWh.
The most prominent member of the Monash Forum, Tony Abbott, said Mr Morrison’s comments were “puzzling” given he had come in to question time last year waving a lump of coal and warning the Labor Party against “coal phobia”.
“I thought he was making a lot more sense that day than he was today,” the former prime minister told radio station 2GB.
Mr Morrison later clarified his position, saying on Twitter: “I have no issue with coal-fired stations”.
He said existing stations should be kept operating as long as possible and “new ones have to make economic sense”.
About 20 Coalition backbenchers are understood to have signed up to the Monash Forum, which is lobbying for public investment in a “Hazelwood 2.0” coal-fired power station in Victoria’s Latrobe Valley, and intervention to keep NSW’s Liddell power station open beyond 2022.
However, Mr Morrison said the government would not subsidise new coal plants, nor any other power source. “The days of subsidies in energy are over, whether it is for coal, wind, solar, any of them,” he said. “That is the way I think you get the best-functioning energy market with the lowest possible price for businesses and for households and that is what the National Energy Guarantee and our energy policies are deigned to achieve.”
NSW Liberal MP and Monash Forum advocate Craig Kelly disputed Mr Morrison’s figures on the cost of new coal-fired power.
He said a 2400 megawatt coal- fired power station being built in Dubai had entered into contracts to deliver power at about $US42/MWh ($54.72/MWh)
“We have no idea what the context of (the Treasurer’s) figures is,” he told Sky News. “Now remember, over in Dubai they don’t have coal, so they actually pay a premium to ship coal into Dubai to burn it to create electricity.”