Ageing coal generator fleet spells trouble for power outages

More than half of Australia’s coal-fired generators are over 40 years old, rapidly approaching the end of their life spans and experiencing declining reliability.

Analysis commissioned by the Climate Council shows coal outages are the primary drivers of power shortage warnings, particularly in summer, and have contributed to some of the largest power price spikes along the eastern seaboard.

Coal power is becoming increasingly unreliable in Australia as generators age.Credit: Getty

Price spikes associated with unplanned coal power outages include in Victoria in January 2019 after the partial loss of Yallourn coal power station; in Queensland in May 2021 after an explosion at Callide coal power plant; and in May last year when unplanned outages at Eraring and Vales Point coal generators contributed to high prices in NSW.

The analysis from international consulting firm Baringa Partners, conducted for the Climate Council, argues Australia’s ageing fleet of coal plants is becoming less dependable.

The firm concluded: “Creating the right environment for investment in replacement capacity – including renewables and complementary dispatchable technologies – is critical if we want to maintain reliability.”

Baringa analysed real-time electricity market data from the Australian Energy Market Operator, finding generators older than 40 years were on average offering just 65 per cent of their total potential generation to the market.

In contrast, “younger” coal-fired generators were offering an average 81 per cent of their potential electricity generation to the national energy market.

The general lifespan of a coal generator in Australia is 40-50 years.

AGL announced in 2022 it would bring forward the closure of Loy Yang A, in Victoria’s Latrobe Valley, to 2035 and Bayswater in the NSW Hunter Valley to 2020-33. Both plants are due to turn 40 this year.

In November, the independent statutory Climate Change Authority reported that about 95 per cent of coal generators operating within the National Energy Market would close by 2035.

This, the authority said, underscored the need to transition Australia’s electricity sector to renewables even as the nation’s demand for electricity continues to rise with population growth and technological advancements.

“Accelerating the roll-out of renewable energy infrastructure needs to be a top priority,” the authority said in its annual progress report.

“The electricity sector can do most of the heavy lifting on cutting emissions to 2030 at least cost, unlock more emissions reductions in sectors like transport and industry, and get Australia ready for the end-of-life exit of ageing coal generators.”

The Climate Change Authority, AEMO and CSIRO have separately made the case for renewables, supported by batteries and peaking gas generation, as “the most cost-effective and timely way to renew Australia’s electricity supply”, the authority said.

Gas peaking plants can respond almost instantly when needed during periods of extreme demand or periods of low renewable generation, especially in winter when low wind and sunshine coincide with cold weather, and households switch their heaters on all at once.

In June, AEMO warned that the east coast of Australia will need 13 gigawatts of new gas fired electricity generation – the equivalent of building 26 new gas plants – within the next 25 years to back up the roll-out of renewables.

AEMO has projected that by 2030, coal-fired generation will retire from Western Australia’s’ electricity network, which will instead be served by renewable energy, firmed by storage and backed up by gas.

Greg Bourne, a former executive with BP Australasia, and a councillor with the Climate Council, said the organisation commissioned the analysis to counter the argument that renewables were contributing to power shortages.

“The commercial reality is that if you put in another coal-fired power station, it is going to be squeezed out completely,” he said.

“Basically, no one is investing in coal-fired power stations in Australia. They know they’re going out ... the money is not going towards coal, it’s going very definitely towards renewable energy, storage and renewable energy of all different types.

“Gas has a small and shrinking role in Australia’s energy future. It’s polluting, expensive and Australia already has more than enough to meet our domestic energy needs.”

Get to the heart of what’s happening with climate change and the environment. Sign up for our fortnightly Environment newsletter.