The Turnbull government in so committed to coal power that it wants to extend the life of the decrepit Liddell power station.
The Coalition has long supported coal profits over the climate. But despite still producing around 70 per cent of Australia’s electricity, coal-fired power is in decline.
The government has interfered in the affairs of AGL, the private company which owns Liddell, to demand it keep it running or sell it to another company that will.
This contradicts their “let the free market rip” philosophy, and shows a distinct lack of confidence in their own new National Energy Guarantee policy.
As the Grattan Institute’s Tony Wood put it, “If you believe in your own policy then you don’t need to do anything with Liddell”. So what’s going on?
Liddell is due to close at the end of its projected 50 year life in 2023. For half of 2017 the plant was running at 40 per cent capacity.
AGL has already spent $123 million on the plant since buying it in 2014 and plans to spend another $150 million to prevent corrosion shutting it down before 2023.
Chief Scientist Alan Finkel estimated the cost of extending the life of the plant by ten years would be $500-600 million.
Liddell’s peak time capacity of 1000 MW needs to be replaced to avoid an energy shortfall.
The Coalition says that keeping Liddell open is needed to maintain “dispatchable” power that can feed electricity into the grid 24 hours a day. They have attacked renewables, saying their intermittency means they are not as reliable a power source.
AGL has announced its own plan to replace Liddell with a combination of renewable energy, gas-fired plants, an upgrade to the Bayswater power station and demand response (paying customers to reduce energy use).
But its closure raises the question of a bigger transition.
Chris Dunstan from the UTS Institute for Sustainable Futures has pointed out that, “As much as 60 per cent of Australia’s coal fired power stations are expected to reach retirement age in the next 15 years”.
Renewable energy is the logical replacement. Renewable plants with battery storage or pumped hydro are every bit as dispatchable as gas or coal power.
Cost of renewables
The cost of renewable energy has fallen dramatically. Kerry Schott, the chair of the Energy Security Board that designed Turnbull’s NEG policy, told The Australian that, “the cost of coal is always going to be more than the cost of wind and sun” and that “you are unlikely to see a new coal-fired power station built unless there is a change in technology or a fall in price of coal”.
She added that these views were “not contentious at a factual level”. And with the cost of battery technology dropping rapidly renewables may soon be the cheapest form of dispatchable power too.
The modelling done by Frontier Economics for Turnbull’s NEG assumes that no new coal will be built.
Building new coal-fired power stations is mad from a climate point of view.
Even from the Coalition’s perspective it is economically foolish. However the Coalition sees extending the life of coal-fired power plants as a way to please the hard right of the party, which is wedded to coal and climate denial.
What best explains Turnbull’s actions is 30 losing Newspolls, his razor thin majority, and his need to mollify the Coalition’s hard right in the Monash forum—a pro-coal grouping around Tony Abbott that wants public money spent to build new coal plants.
Extending the life of coal power also pushes difficult political questions for the Coalition, over new investment and power prices, further down the line.
AGL’s CEO Andrew Vesey has given Turnbull the finger for his own reasons. Liddell shares coal transport and water infrastructure with Bayswater power station that AGL doesn’t want to hand over to a competitor. Senior Coalition figures have accused AGL of wanting to “short” the market and push up power prices by refusing to sell.
If true this is because privatisation and handing our power supply over to the free market means investment decisions are made based on profitability, not securing an essential service.
The Coalition has long campaigned on the furphy it would act on power prices, but has nothing to offer but empty political rhetoric.
Government needs to take power back into public hands, to take control of both power prices and the climate transition we so desperately need. Liddell’s life shouldn’t be extended, but even closure in 2023 is too slow.
We need renewable replacement built now. It should be fully government funded and guarantee jobs to current power workers.
By Chris Breen