PM’s push to keep coal power plant open

The Turnbull government opens talks with AGL to keep one of the company’s vast coal-fired power station operating longer.

Prime Minister Malcolm Turnbull, right, and Energy Minister Josh Frydenberg arrive during House of Representatives Question Time.

The Turnbull government has opened talks with energy company AGL to keep one of the company’s vast coal-fired power station operating until at least 2027 amid new warnings about electricity shortages that could hurt consumers and business.

Malcolm Turnbull revealed the talks to parliament on Tuesday after receiving a new report on the outlook for the electricity sector and the prospect of shortfalls in baseload power as coal power stations are shut down.

The Liddell power station near Newcastle in NSW has a capacity of about 1900 megawatts and is due to close in 2022, withdrawing baseload power that is produced around the clock regardless of weather conditions.

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The AEMO’s annual “stocktake” of the electricity market told the government that “emergency measures” were being put in place to stop shortfalls from happening.

The report from the Australian Energy Market Operator was released on Tuesday and sets out potential areas of shortages in capacity. It is separate from a private report from AEMO on baseload power that is guiding the government’s thinking on a clean energy target.

“What is shows is a sorry tale of Labor mismanagement, particularly in South Australia and Victoria, and it’s left our national electricity market vulnerable,” Mr Turnbull told parliament of the public AEMO report.

“It confirms in those states they’ll need to put in costly backup arrangements, including diesel generators, to secure supply.

“The likelihood of a shortfall and load-shedding to keep the power on is between 39 and 43 per cent in Victoria and 26 to 33 per cent in South Australia.”

Mr Turnbull said he and Energy Minister Josh Frydenberg were speaking to AGL about keeping Liddell operating.

“The Energy Minister and I are already in discussions with the owner of Liddell, AGL, about how we can ensure that power station stays in operation for at least another five years after 2022,” Mr Turnbull said.

“How has the Victorian Labor government responded to this crisis? More of the same mistakes — calling for more renewables with no back-up.”

The AEMO analysis shows a “heightened risk” that reliability standards will not be met and that new action is needed to prevent shortages, which it calls “significant unserved energy” or USE.

“The highest forecast USE risk in the 10-year outlook is in 2017–18 in South Australia and Victoria,” the regulator says in the analysis issued shortly before 3pm.

AEMO noted the problems in South Australia were being addressed by bringing additional diesel generators and battery storage into the state.

AEMO said the failure to meet reliability stanards would increase in NSW and Victoria after the projected closure of the Liddell power station in 2022.

“Retirement of other coal generation in NSW after 2022, if not appropriately replaced by firming capability, could significantly increase the risk of load shedding,” it said.

Coalition MPs are deeply concerned about the prospect of load-shedding and “demand management” to curtail energy use, knowing voters will turn against governments they hold responsible for the problem.

AEMO found that renewable power could help to fill some of the gap in the market but that this could not be enough on its own to make up for the closure of coal power stations.

“If this renewable devlopment was to lead to earlier retirement of existing tghermal generation, the risk of USE would increase without additional firming capability,” it said.

The argument for more “firming capability” will lend weight to calls within the Coalition for a new policy to encourage the extension or expansion of existing coal-fired power and possibly the construction of new coal-fired power stations.

AEMO said the risks to the market included any “material” reduction in capacity over the peak summer months from lower production from wind turbines or slower installation of renewable power.

If this occurred there would be “signifcant supply shortfalls” across the east coast electricity grid.