Power profit slide ‘a threat to Queensland budget’

Queensland’s publicly-owned energy generators are unlikely to make a profit after 2024 as renewables drive down wholesale and forward contract prices.

Queensland’s coal-fired generators will be unprofitable by 2024, a report says. Picture: William Debois

Queensland’s publicly owned ­energy generators are unlikely to make a profit after 2024 as renewables drive down wholesale and forward contract prices, according to a new report released on the eve of the state budget.

The Queensland Conservation Council report analyses public reports and uses market data to forecast revenue streams of CS Energy and Stanwell, predicting the government-owned corporations will need to be propped up by taxpayers from 2024.

It argues the government has been optimistic in its profit forecasts for the generators and says the predicted drop in profitability was not reflected in last year’s state budget, which forecast profits of more than $2bn out to 2024.

Describing it as a “looming profitability crisis”, the QCC said the 2021-2022 budget, to be released by Treasurer Cameron Dick on Tuesday, needed to be realistic on its future income predictions from the corporations and plan for a renewables future.

“We believe that the 2020-21 budget overestimates profits in 2020-21, even though it was released halfway through the year in November 2020,” the report states. “It continues to make optimistic assumptions through 2021-22 and 2022-23, although it does forecast a decline in profits.”

The report suggests CS Energy will be unprofitable from next year and will need to $430m over four years from the government to keep it propped up.

“The Queensland government can no longer rely on its coal power stations to bring in revenue. Their profitability is tanking and creating a giant budget black hole,” QCC director Dave Copeman said.

Public ownership of the generators has been at the centre of a political debate for more than a decade but the Palaszczuk government has no plans to sell or lease the assets, which had their value written down by nearly $1bn in 2019.

The government has a 50 per cent renewable target by 2030 and has recently ramped up its push to publicly fund renewable energy projects, including a $2bn renewable energy fund.

Energy, Renewables and Hydrogen Minister Mick de Brenni said the “traditional generators” remained important because they could be called on at short notice to keep power affordable during periods of high demand.

“As the state’s energy network diversifies to include a more dispatchable mix of renewable energy, our $2bn Renewable Energy and Hydrogen Jobs Fund will allow our publicly owned energy companies to develop renewable energy and hydrogen projects,” Mr de Brenni said.

Stanwell has three generators – Stanwell, Tarong and Tarong North – which are not scheduled to close for up to two decades.

Stanwell’s chief executive Richard van Breda quit in April, just days after he told a future energy summit that planning was under way to mothball and eventually retire the state’s coal-fired power generators.

The company’s chairman Paul Binstead later wrote to employees telling them Stanwell had “no plans to decommission any of its generation ahead of time”.

Queensland University of Technology adjunct professor Gerard Ledwich, an expert in the electricity industry, said coal-fired power stations would continue to be needed in the state until a viable energy storage ­industry had been developed.