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AGL ridicules Coalition request to keep Liddell open extra 5 years

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The Turnbull government’s efforts to shore up the coal industry has been made to look ridiculous after AGL Energy rejected its call to extend the life of the ageing Liddell coal generator by 5 year, saying it would do nothing to address either energy security or prices.

Prime minister Malcolm Turnbull announced in Question Time that the Coalition would ask AGL Energy to keep the Liddell coal fire generator open another five years beyond its planned closure – at the age of 50 – in 2022.

AGL expressed little enthusiasm for the idea in an official statement, but then in a tweet CEO Andy Vesey said it would be pointless.

Turnbull’s effort to extend the life of Liddell appeared to be prompted by the major fossil fuel lobby, the Minerals Council of Australia, and ignored pleas from the Australian Energy market Operator for smarter, quicker, and cleaner response to the country’s energy transition.

“The Energy Minister and I are already in discussions with the owner of Liddell, AGL, about how we can ensure that power station stays in operation for at least another five years after 2022,” Turnbull told Parliament.

Screen Shot 2017-09-05 at 3.03.05 PM

This is despite AEMO saying that even with Liddell retired as expected in 2022, there is no breach of the system’s reliability standards, and that any threat to security can be minimised if there is a big push for more distributed renewable energy (see the blue dots in graph above).

The biggest threat to reliability is if another coal generator was to close at the same time, a situation that AEMO says could arise if market conditions changed.

In response to a question about what the Coalition was doing to address record high electricity prices, federal energy minister Josh Frydenberg accused the Opposition of trying to woo green votes by pushing the closure of coal plants.

The request appears to put AGL in an invidious position. It has made clear that the future of baseload will be provided by renewables and storage, and has based its whole marketing campaign on the planned start of its exit from coal when Liddell closes in 2022.

Turnbull then focused on the possibility that AGL could be convinced to sell Liddell to another buyer – such as Trevor St Baker who bought Vales Point for $1 million.

AGL has indicated it has no enthusiasm for any such deal, and it would appear the only way that St Baker would do this would be if the government, for example, took responsibility to deal with the rehabilitation costs that would inevitably have to be made. And that would be extraordinary.

Even the costs of refurbishment to keep it going would be prohibitive. Bloomberg New Energy Finance also said recently that the cost of wind and solar would beat even the cost of refurbished coal plants like Liddell. (see the dotted line in graph below).

coal - graph 10 - BNEF

The Coalition, however, was in full support of coal in parliament on Tuesday, despite having received a detailed report from AEMO playing up alternatives such as demand management, flexible and dispatachable generation, storage, and behind the meter initiatives.

“Coal provides a stable, reliable, cheap source of power,” Frydneberg told the House of Representatives, choosing instead to attack Labor.

“(But Labor) given half a chance in government, would join with the Greens, close down our coal-fired power stations, push up power prices and decrease the reliability of the system.”

Turnbull continued that attack, claiming that the AEMO report “shows is a sorry tale of Labor mismanagement, particularly in South Australia and Victoria, and it’s left our national electricity market vulnerable.”

“It confirms in those states they’ll need to put in costly backup arrangements, including diesel generators, to secure supply.”

But the AEMO report actually says the biggest risk in the future is the lack of a coherent policy that encourage more renewable energy on a national plan.

Even former environment minsiter, Greg Hunt, joined the party, accusing the Victorian Andrews government of “deliberately pushing” that state’s Hazelwood coal plant out of operation – a charge the plant’s owner, Engie, might contradict.

“While we are reducing pressure on electricity prices, they are deliberately increasing pressure at the state level and the federal level” Hunt said during question time.

“They are deliberately planning to send electricity prices sky-rocking just as they have done in Victoria” he said.

Add: We received this statement from AGL in response to Turnbull’s request on Liddell:

“AGL has committed to the closure of the Liddell power station in 2022, which is the end of its operating life.  AGL has provided this advance notice to avoid the volatility created by the sudden exit of other coal-fired power stations. AGL is actively assessing what capacity will be needed post 2022 and we, along with other market participants, will consider AEMO’s report in light of these plans.  

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  • Joe

    Ah Big Mal, no surprise, another public spray at SA and Vic. But Big Mal never talks about NSW where we have had blackouts and load shedding this year. In the heatwave of February it was Rooftop Solar that partly saved the day in NSW. So Big Mal please stop making a fool of yourself.

    • Matt

      Garbage Joe. PV was already rapidly declining when the LOR3 condition was reached in February; it was the Tomago smelter taking ~600MW of demand out of the system that prevented rolling blackouts.

      • Brian Tehan

        So it was solar PV (renewables) AND demand management – as per the AEMO plans for the future. The biggest danger to reliable electricity is – Malcolm Turnbull and his inability to do anything at all, despite, pretty much, wholesale agreement from the experts in the field, the AEMO, the power generators, the grid owners and the renewable energy industry. The only ones who don’t agree are the far right of his party and the Minerals Council.

      • stalga

        The wind was also blowing that day. This has been reported on this site. Tomago did not reduce output for the afternoon peak, they reduced their output by agreement days in advance. The load shedding warning was issued because FF plants played up when needed.

        • Matt Howell

          Stalga, my understanding is that Tomago turned off one potline around 4.30 that afternoon and then switched off another potline about an hour later at the direction of AEMO, taking ~600 MW out of the system and preventing blackouts. I also understand that this was the first time 2 potlines were taken out simultaneously. So it all ocurred on the afternoon of Feb 10, not ‘days in advance’.

          • stalga

            AGL owns Tomago and an agreement has existed since 1991 for that type of scenario. They said they had “significant warning” from the AEMO and are compensated for loss of production. Remember that Liddell went down days in advance, so they knew the state of play well in advance.

            I googled “Tomago, heatwave” to fact check my first post, and I chose the SMH article.

          • Hey Stalga, before you go any further, and just as heads up, I do believe that Matt Howell is the very same Matt Howell who runs the Tomago smelter, so I think he might be across the facts of the matter.

          • Matt

            Thanks Giles. How does your diary look for a visit anytime in the next 4 weeks? We’d really like to show you some of the things we are doing and get your perspective.
            Regards, Matt

          • David leitch

            Matt

            I’d be very interested to be part of that as part of the Reneweconomy team for this purpose.

            I covered CSR for many years as a rated analyst, visiting Tomago a couple of times as part of that, and of course I’ve been covering the the electricity supply to Tomago and its impact on AGL and CSR and the industry for several years.

            While Tomago isn’t compensated for the value of lost production it was my prior understanding that part of the electricity price negotiation is that AGL has a right to cut supply and this right is considered to have value to AGL as part of the supply contract. Ie the price is lower than it would be without that right.

            It also amuses me that two years ago the renegotiated price with AGL was regarded, by CSR at least, as too high, adding $230 t to costs of production compared to the historic price, but of course from today’s perspective looks an absolute bargain at less than half the spot price. And of course the aluminium price in US$ is up 10-15% as well.

          • Matt

            David,

            Thanks for taking up the invitation; we are really keen to share our perspective on the current situation and you clearly have some subject matter expertise to add.

            I will make contact via LinkedIn.

            regards,
            Matt

          • Andy Saunders

            of course if we had a usable demand-response regime in place then Tomago would be compensated for such demand reduction…!

          • Matt

            I can assure you Stalga, that AGL does not own Tomago, nor are Tomago compensated for loss of production.

          • Ken Dyer

            AGL does not own teh Tomago Smelter. Rio Tinto does. This whole exercise is about Turnbull pandering to big business.

          • stalga

            I now recall with confidence that the option of reducing Tomagos’ output was being discussed in the media at least one day earlier.

      • Joe

        Matty you can try to rewrite history as much as you like. In the February heatwave, the authorities paid credit to Rooftop Solar and Load Shedding that avoided a blackout in NSW. And when ‘strong winds’ recently bring down powerlines in NSW blacking out thousands of homes no public spray from Big Mal. But when a mega storm with ‘strong winds’ knock over transmission towers in SA causing a blackout it is an ‘unhinged’ Big Mal spraying Premier Jay.

      • trackdaze

        On account of multiple failures from intermittent unreliable gas and coal plants.

  • Chris Fraser

    AGL would not be obliged to keep Liddell open in 2022. If they live up to their own hype on bring the biggest clean investor in Australia, then obviously they have planned a solar system that wont faint in the heatwave to come. The Coalition wouldn’t have thought on that.

  • BushAxe

    The Liberals and MCA should buy Liddell for a dollar and run it themselves.

    • Brunel

      Great dare! Ask Gina Rinehart to buy it.

    • Rod

      I think that is their plan going by Trumbull’s response to Vesey’s tweet.

    • trackdaze

      AGL out to turn Liddell into solar and storage.
      take that minerals council and your puppet party.

  • Joe

    Poor old ‘Two Tongues Turnbull’. He is bedevilled by the politics of RE but he has brought it all upon himself. I suspect that personally he is wanting to get on with the RE transition. I mean, he has Rooftop Solar and Home Battery Storage at his Sydney home and he loves The Snowy, yes. But his problem is that he cannot reconcile his love for RE and his statements on the public record from his time in 2009 as Opposition Leader with the present problem of keeping his job as PM job that requires him to keep the coal boosters within his Liberal Party happy. ‘The Clean Energy Target’ will be morphed into ‘The Keep Coal Energy Target’. Perhaps Big Mal should do the honourable thing and just quit his job as PM. He will be gone anyway as soon as Newspoll loss number 30 rolls around….Terrible Tony will see to that !!!!!

    • DevMac

      His position as Prime Minister was rock solid after taking the leadership. After all the Libs were saying about unstable leadership of the Labor Party there was no chance they’d go down the same rabbit hole.

      There is no excuse for MT’s flip flop on, well, pretty much everything that made him seem a half-decent politician. I think his words back then were just as political as his words seem now. He was taking a stand that he thought would gain him popularity.

      He just got his timing backwards, and bad timing is political suicide.

  • Miles Harding

    Undaunted by ridicule, the COALition train trolls on. This AM (6Sep) ABC radio was running the story minus the obvious cost and reliability issues with keeping the dinosaurs alive.

  • Robert Comerford

    Sorry, if you think AGL has made the govt look stupid you are listening to a lot of different media outlets than I am.
    The reaction has been the opposite.

    • Kevan Daly

      At their 2016 AGM, AGL reiterated that they were planning to close Liddell in 2019. Then the wholesale price of electricity surged and, lo-and-behold, AGL found that they could push closure out to 2022. The fact that AGL knocked back the Govt so abruptly says more about AGL than it does about the Govt.

      • Robert Comerford

        Sadly, not to vast majority of the public Kevan.

  • Ken Dyer

    AGL is spot on. They closed Liddell down in 2016 for repairs and no
    effect was felt. Liddell is so expensive to run, only 50% of it capacity
    is used.

    http://reneweconomy.com.au/agl-shuts-down-liddell-coal-fired-power-station-units-for-repairs-12915/

    The
    only reason Liddell stays open is because of the Rio Tinto Tomago
    Aluminium Smelter. That is why Turnbull and co want Liddell to stay
    open, to protect big business.

    http://www.abc.net.au/news/2014-08-20/agl-modelling-says-hunter-power-plant-and-aluminium-smelter-cou/5683466

    The
    following article by Clive Hamilton and Hal Turton highlights
    Government subsidies, the influence of the highly polluting aluminium
    industry.

    http://www.tai.org.au/sites/defualt/files/WP21_8.pdf

  • Mike A

    When the new rules and Tesla batteries are up and running in SA in goes from the raped highest cost to the lowest cost in Australia the Liberal party is going to be very embarassed if not completely unelecticable. Malcolm is getting some pretty bad advice if he is getting any.

  • Robert Comerford

    At least NBN TV gave a more reasoned view on tonight’s news.