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AGL calls Coalition bluff on Liddell, focuses on solar, wind and storage

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liddellAGL Energy has called the bluff of the federal Coalition over the future of Liddell, pointing out that the ageing coal plant is unreliable, and stating its clear focus is on replacing the capacity with renewable energy and storage.

CEO Andy Vesey agreed to take the government’s proposal to extend the life of the coal generator or sell it to the company board, but that commitment is likely to be nothing more than a face-saver for a Coalition government pushed into the realms of stupid by its desperation to appease its right wing and the Nationals.

There is no way the AGL board would approve a proposal not favoured by Vesey, and the CEO clearly has other plans afoot, and they are all about renewables, peaking plants and storage.

“Short term, new development will continue to favour renewables supported by gas peaking,” Vesey said after a meeting in Canberra with prime minister Malcolm Turnbull, energy minister Josh Frydenberg, and deputy prime minister and Nationals leader Barnaby Joyce.

“Longer term, we see this trend continuing with large-scale battery deployment enhancing the value of renewable technology. In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost,Vesey said in a statement.

And he made clear in this statement that Liddell would retire, as planned. “Following today’s meeting with the Prime Minister, we have committed to deliver a plan in 90 days of the actions AGL will take to avoid a market shortfall once the Liddell coal-fired power station retires in 2022.”

And for good measure, he tweeted that line …. “once the Liddell coal-fired power station retires in 2022.”

agl vesey tweet

AGL also made a nonsense of the Coalition claim that extending Liddell would increase energy security, pointing out that Liddell was “unreliable” and had failed to deliver even half of its capacity during the February 10 heatwave. It says it will have to spend $159 million keeping it together even before the stated 2022 closure.

“Since AGL acquired Liddell from the NSW Government in 2015, AGL has invested $123 million in the plant to improve reliability,” it said in its statement.

“Despite this investment, during the February 2017 heatwave, two units from Liddell were out of the market due to unforeseeable boiler tube leaks. As a result, there was not enough energy in the system and NSW experienced blackouts in parts of the State.”

liddell heatwave

Indeed, as the NSW Liberal energy minister Don Harwin has pointed out, it was renewable energy sources that kept the lights on in NSW in February (apart from the Tomago smelter which was forced to load shed when two gas plants failed).

“As Liddell approaches the end of its life in 2022, it will likely experience more unanticipated outages, which is why we will spend a further $159 million to improve reliability at Liddell before it closes,” Vesey said.

Experts have suggested it would cost between $500 million and $1 billion to keep it going another five years. AGL says the rehabilitation costs for both Liddell and Bayswater amount to a further $880 million.

And AGL made clear that it would be a better idea to spend that sort of money on other technologies, and that the future was clearly in renewables, accompanied by storage; areas where it intends to spend $2 billion.

“The best way to address pricing challenges in the market is to increase supply. We’re investing more than anyone else in building new supply to drive down prices and stand ready to invest more when there is certainty on carbon policy,” said Vesey.

AGL’s plan to give Turnbull an outline of its actions to avoid a market shortfall once Liddell is retired is entirely consistent with its previously stated policy of investing in wind and solar, and delivering “storage ready” projects and ultimately turning the Liddell site into a renewable energy hub with wind, solar and storage.

It would be bizarre to think that AGL is obliged to come up with all the new capacity to replace Liddell (8,000GWh a year), given that AEMO has called for a new market mechanism to deliver the dispatchable generation required, and its observation that a national renewable energy target would deliver a large amount of the power needed to avoid any risk of shortfalls (and 45 per cent renewables by 2030).

Frydenberg said that AEMO had made clear that “time is of the essence”. But AEMO also made clear that it was referring to the need for credible national policies designed to ensure enough dispatchable generation.

It also made clear that ageing coal plants of the like of Liddell did not fit the bill of fast and flexible capacity that would be needed in times of peak demand, such as heatwaves. Indeed, such generators were likely to be the cause of problems rather than the solution.

  

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  • Rod

    Next brain fart Mal?

  • wholisticguy

    “Short term, new development will continue to favour renewables supported by gas peaking, Longer term, we see this trend continuing with large scale battery deployment enhancing the value of renewable technology. In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost,” Vesey said in a statement.

    Is this a dream? Clear, unambiguous statements from a major energy encumbent directly to the PM and the Media outlining an energy policy that matches with consumer expectations, international climate obligations and economic reality?

    I want to be thankful but I just can’t believe it. I suppose it can still fall on deaf ears?

    • Chris Drongers

      Yes! An adult is in the building. And he isn’t a politician.

      90 days to put out a map for Australia’s electricity system (generation and consumption), primacy of market signals, stable long-term plan.

      In that 90 days the LNP government will continue to prevaricate, call for and receive and then ignore reports, play wedgie games with each other while ignoring the longer-term interests of the Australian people.

      • Joe

        Gotta luv Big Mal. No Energy Policy except letters by Christmas, barcodes on invoices and the odd helo ride over the Snowy. So he gets AGL to put together a ‘Plan’….that is to be Big Mal’s Energy Policy?

    • Rod

      Apparently according to the mainstream media that was a win for Trumbull!

      If that was a win, I would hate to see him lose.

      • Joe

        ‘Mainstream Media’…that would be Rupert’s fleet of Liberal Party Newsletters…The Australian, The Daily Telegraph etc.

        • Nick Thiwerspoon

          The toxic sludge Murdochcracy

  • Robin of Hood

    The morning chant of the National Party and the Daily Telegraph:
    Coal Good, Renewables Bad Ugh, Ugh.
    As most solar and wind farms are being build in rural and regional Australia, one would question why the COALlition does not want development in these regions.

  • trackdaze
  • Greg Hudson

    AGL should forget the $159m needed to keep Liddel going for another 5 years and simply let it die a sudden death. It’s not like it is an expensive (i.e. $1) asset after all…

    • solarguy

      No their being responsible and their not about to shit in their own nest and leave a bad smell.

      • Greg Hudson

        They should spend the money on knocking it over and building a wind/solar/battery farm on the site instead IMO.

        • solarguy

          That’s what AGL want to do, but they can’t do that now.

  • Grpfast

    Funny, how Vesey’s view and direction is exactly SA govt’s plan and direction.
    All states are planning and implementing the same.
    Asks the question why we need a Federal government at all when they can’t or won’t govern for Australia.

  • John Saint-Smith

    Giles, I think it is completely gutless of you not to mention the ABC’s late night interview conducted with Vesey, in which he made it plain that he had a ‘third plan’ – to replace Liddell with other, peaking gas, renewable and storage capacity which was always their intention, and which they could bring forward. He said that was what he would put to his board. That is the only post Turnbull meeting version of events that we have. The ABC have been running this ‘interview’ time and time again. Give credit where it is due.

    If it weren’t for the ABC, which you love to bag, and now cast as camp followers of the climate change denying Murdoch press, we wouldn’t have any mainstream investigative journalism left in this country, and you and your brave band of renewable energy advocates (myself included) would have been arrested by now.

    We are getting dangerously close to Trump ‘fake news’ in this country, indeed in many respects we’re already worse than them. If the ABC is seen to be ‘biased in favour of coal’ by you, while it is being attacked on a daily basis by the Murdoch press for their pro-socialist, anti-business bias, we will have no friends at all. Remember the One Nation view: that they should be silenced for ever for having attacked Pauline. At this rate, we will soon find ourselves without a voice in the free press, your squeaking from the sideline notwithstanding.

    Pick on your enemies, not your friends.

    • Farmer Dave

      John, I think you are being too hard on Giles. I can recall some very justified criticism of Chris Uhlmann, but not similar criticism of the ABC as a whole. The Murdoch media are probably the main culprits, but I would not know, as my personal boycott of them started during their atrocious treatment of Julia Gillard. Other media have not been too bad – Katherine Murphy has had some excellent recent articles in the Guardian dealing with the COALition’s energy policy failures, for instance.

    • My point was in the reporting of the news. ABC’s bulletins were led by with “AEMO warns of blackouts and rising prices”, which is not what AEMO said, but a Coalition talking point. I expected better. The country deserves better. Yes, lots of niche programs with great interviews – Lateline’s great interview with frydenberg, 7.30’s with Figueres, which i mentioned, but it needs to lift its efforts in reporting, because that is what most people listen to. If you think what i do is gutless then i don’t think you understand much about journalism.

    • John Saint-Smith

      Thank you for your response, Giles. Your defence is good, but unfortunately, we need to be more careful in ‘spraying insults’ about the ABC. They have adopted an unfortunate ‘aggressive style’, which they mistakenly believe is ‘good journalism’. Instead of listening to the answers provided by the interviewee, the ‘aggressive’ journalists keep repeating the lies and propaganda drivel pumped out by the LNP, Murdoch press, IPA and fellow travellers, and expect the interviewees to respond to the same question again and again. As a result we learn nothing new. That’s what needs to be attacked, not the illusion of bias that the questions seem to convey.