Gladstone Power Station’s closure may present new opportunities, say experts

The future of Gladstone's iconic power station hangs in the balance as experts clash over whether the site's billion-dollar infrastructure can be salvaged.

Rio Tinto’s Gladstone Power Station may still have a future in the energy sector despite the mining giant flagging its possible closure six years ahead of schedule.

Gladstone has a proud history of heavy industry and with multi-billion dollars worth of infrastructure available in the central Queensland city, energy experts believe the imminent closure may present new opportunities.

University of Queensland Professor Alexander Klimenko said there were two potential options for the site’s future – converting and modifying it with a synchronous condenser or using it for heat energy storage.

“The Gladstone Power Station is one of the oldest power stations … and it’s very important for the Queensland economy, but it probably has one of the lowest efficiencies,” he said.

“So its modification or retirement is inevitable in some way.”

Prof Klimenko said the power station has played a “very crucial role” in supplying the state’s aluminium industry with energy.

An aerial view of the Gladstone Power Station.

On Wednesday Rio Tinto announced that the state’s largest coal-fired power station could close as early as March 2029, as its major customer shifts to low emission electricity sources.

The early retirement of NRG Gladstone Power Station would be in-line with the expiry of existing supply and operational arrangements, including its majority owned Boyne aluminium smelter in Gladstone – the power station’s biggest customer – which has renewable energy and large-scale battery storage agreements in place to meet demand.

Grattan Institute energy and climate change senior fellow Tony Wood said given the site’s port and transmission line infrastructure, the power station could have a future providing electricity generation backup or support the transition to renewables.

The potential closure of the NRG Gladstone Power Station has been pushed back to 2029.

“One of the great challenges in the energy transition is how to make sure you maintain the system with enough power,” he said, adding the site’s future also depended on the ownership of the plant.

Mr Wood said whoever takes over the site “will have to decide whether the power plant will be mothballed and knocked over”.

“The Gladstone Power Station has six individual turbines and I could imagine that some are in a better state than others,” he said.

“The question is – do you keep running it as a coal fired power plant or do you, like they have done in Germany, keep it as back up?”

A coal train leaves the Gladstone Power Station.

However, Gerard Ledwich, an adjunct professor at Queensland University of Technology, said the power station’s future was “all very uncertain”, but predicted it could likely be mothballed.

“The tendency for other power stations has been mothballing, although Gladstone’s getting a bit old, and so its potential to be sitting mothballed for 20 years is not high,” he said.

“I suspect that if it’s uneconomic for Rio, it’ll be uneconomic for anyone else.”

Prof Ledwich said the plant’s financial viability had also been impacted by the amount of time it could run in a day.

“As time goes on, more and more rooftop solar and other renewables are coming onto the grid,” he said.

“So even though it’s very helpful during the evening peak, its ability to generate for 20 hours a day is then limited because of its costs that other players undercut.”

Queensland Conservation senior campaigner Stephanie Gray said it made “sense” that, once decommissioned, the Gladstone Power Station would be connected to new renewable energy or storage.

“Coal power station sites have good transmission access so it makes sense to connect new renewable energy or storage infrastructure there, but there would have to be a process to work out what makes sense for that site and what the community would like to see there,” she said.

Next Advisory chief executive Stephanie Bashir said Rio Tinto’s announcement about the early closure of the coal plant was “likely a fishing for subsidies exercise”.

Ms Bashir cautioned the state government that, instead of subsidies, it invested capital “in the timely delivery of renewable energy build out”.

Rio, which has a 42.125 per cent share of the joint venture ownership of the coal-fired power plant, said the Australian Energy Market Operator had been formally notified of its potential retirement.

No final decision has been made to retire the 1680MW power station, which has operated since 1976, but there is potential to extend its life should market conditions and other factors allow.

Earlier this year Rio shopped around the sale of its share of the joint venture and it is understood there are a number of groups still interested.

Originally published as Gladstone Power Station’s closure may present new opportunities, say experts