Closure puts pressure on power

Australia’s largest coal-fired power plant, Origin’s Eraring generator near Newcastle in NSW, is to close. Federal Energy Minister Angus Taylor says this is “bitterly disappointing”. But it is just the latest chapter in a long story of policy failure. Only last week AGL Energy announced the early closure of its two major coal-fired plants. Coal provides about 70 per cent of the electricity in the national grid, yet it is being made uneconomic by the rise of subsidised renewables, solar and wind power with battery storage. This is a cleaner outcome, better for the planet, but governments cannot escape their fundamental duty to ensure households and industry have a competitive, reliable source of power.

Origin and NSW Energy Minister Matt Kean are seeking to allay the obvious fear of higher electricity prices and a volatile energy market with the promise of two 700-megawatt batteries. Mr Kean even has a trust-me name: the Waratah Super Battery. This focus on storage is a reminder that it’s not a simple matter of replacing coal-powered megawatts with renewable megawatts. Coal gives non-stop baseload power, while wind and solar are intermittent. The other fair dinkum substitute for coal would be gas, although Australia’s southern states are forecast to suffer a supply shortfall starting as soon as this year. New gas-fired plants may open in the Northern Territory, Queensland and NSW, but a history of arbitrary restrictions on gas exploration in some jurisdictions has not helped.

Meanwhile, intermittent renewable power has surprised even its advocates with its rapid rate of growth. This will be unsustainable unless it is supported by dispatchable power. Coal is being removed as a candidate. It is not just low wholesale prices and subsidies for renewables that are undermining coal-fired power but also climate activism in the financial sector.

There is speculation that Origin may be open to selling its Eraring plant to a new owner. Also possible are government payments to ensure sufficient capacity in the energy system. Mr Kean will be under pressure to plug the gap; Eraring supplies about a quarter of the electricity in his state.

The risks to our national energy market have been growing for some time and the policy response so far has been erratic. If there was ever a good time to get real, this is it. Energy systems are vital sovereign infrastructure, which is why we (belatedly) have decided to protect them from foreign interference. Let’s hope national security and future bill shock intersect during the coming federal election campaign – and command the voters’ attention.