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AGL to shutter 480MW of South Australia gas power plant

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AGL Energy says it will mothball more than one-third of the capacity of its 1,280MW Torrens Island power station in Adelaide in 2017, just 10 years after it bought the ageing natural gas plant for $417 million.

AGL said on Wednesday that it would shutter four out of eight of power station’s generating units – a group of the plant’s “older units” (built nearly 50 years ago) known collectively as ‘A station’, with an aggregate capacity of approximately 480MW.

“Based on the current market outlook AGL has decided that the Torrens Island A station will be mothballed in 2017,” said AGL Group general manager of merchant energy, Anthony Fowler, adding that the decision would be reviewed if those conditions – including rising gas prices – changed materially.

But beyond the relentless surge of gas prices, Australia’s energy market outlook has changed a great deal since AGL bought the plant back in 2007 – 40 years after A it was completed in 1967 (the ‘B station’ would be completed in 1976).700px-NorthArmPano

In South Australia, in particular, there has been a huge shift in electricity distribution patters and peak demand due to record-breaking contributions from the state’s wind farms and rooftop solar households – a contribution that will only increase with the Labor government’s newly boosted renewables target.

In September, Premier Jay Weatherill announced South Australia would increase its renewable energy target to 50 per cent by 2025 – up from the 33 per cent target that it has already met, six years ahead of scheduled date of 2020.

Weatherill said the ambitious target was essential to help the state reach its target of $10 billion investment in “low carbon” generation by 2025.

Back in 2007, however, AGL boasted that the purchase of Torrens Island added “substantially” to its “growing fleet of low carbon emission generating plants,” and accelerated its four corner strategy of rapidly developing generating capacity to meet rapidly growing demand.

And in 2009, when AGL announced an $800 million expansion to the plant, to increase its total generation capacity to 700MW during periods of peak demand, the move was welcomed by then SA Premier Mike Rann as a guarantee of further security of electricity supply – especially during the state’s notoriously punishing summer heat waves.

What they didn’t foresee, was that the expansion of rooftop solar in the state – South Australia has well over 560MW of it by now – and wind energy would have a huge effect on electricity supply (not to mention wholesale prices) and virtually remove the need for peaking plants powered increasingly expensive gas.

On September 30 South Australia electricity generated by wind and solar managed to meet all demand for most of the day, and electricity prices went negative for a considerable period that morning.

And with the November launch of the Snowtown II wind farm north of Adelaide, the state is now expected to get 40 per cent of its electricity needs from wind and solar.  

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  • barrie harrop

    The serious issue is now peak capacity and guaranteed base load for new mining projects.

    • Andrew Woodroffe

      How so? Base load is a flat load, actual load varies. We merely need to ensure that there is sufficient mid level gas peaking to cover the gap between wind + solar + hydro and load. As for covering (an ever declining) peak load, increasing solar will only help, here.

  • disqus_3PLIicDhUu

    The fact AGL is shuttering 500MW is possibly an indication that AGL’s windfarms are paying and the economic and future GG cost of running gas is becoming to pricey.
    It appears the wind input is not as intermittent as some would have wanted, as it may not be blowing hard at Snowtown, but we’ll could be at Starfish Hill.

  • Billy Bangle

    Maybe wind and solar produced enough electricity for SA for one day, but I bet our Carbon only went down modestly and the excess power was exported.
    Jay Weatherill’s grandstanding is working for the moment, because excess wind and solar energy is exported and when the wind ain’t blowing large imports occur. But South Australians are paying high prices for electricity in spite of the substantial subsidies that come from the electricity retailers buying the power surplus at below cost to help meet their RET.
    SA is part of the SE Australian grid, I think that as wind/solar get above 10% of the total the system will become unstable, prices will be erratic.
    Koningstein & Fork from Google were involved in a 100s of millions of $ project and their conclusion was that replacing Carbon just from renewables was impossible.

    • David Osmond

      Hi Billy, on Sep 30 of this year, wind generation averaged a little over 1200 MW from 8am to 8pm. Exports averaged 250 MW during this same period.
      Connection limits mean SA is unable to import or export more than about 600 MW. SA’s average demand is about 1500 MW.

      • Billy Bangle

        Could you give me some references please. The real issue is of course how much carbon went down by. If no one knows, then the systems a complete croc.