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Anglesea brown coal generator to close after losing social licence

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It could be the classic tale of a stranded asset. And one that should resonate throughout the energy and investment sector. Even when Alcoa announced 15 months ago it would close its Point Henry aluminium refinery near Geelong, it refused to shut the highly polluting brown coal coal fired generator that had supplied the refinery for 46 years.

Alcoa reasoned that someone must want to buy its output, or even the generator. “Alcoa believes the Anglesea power station is a viable asset and that is why it will be offered for sale,” a spokesman said in early 2014.

But no one bought it. Finally, more than one year after the announced closure of the smelter and following an intense push by the local community, Alcoa has seen economic and environmental reason, and decided to close the 150MW facility.

The Anglesea generator had supplied about 40 per cent of the smelter’s power needs but could not continue when operating in a free market. Despite being one of the lowest cost generators, it had high sulphuric content, making it a controversial polluter, and it lost its social licence to operate.

merit order

In any case, the coal market is being readily reshaped by the incursion of renewables, with several coal fired generators closing, including Wallerawang, Collinsville, Munmorah, Energy Brix, and Playford B.

However, other coal fired generators are being spared a similar fate because the Federal government is intent on ensuring that there is no policy signal for renewable energy.

After finally agreeing to a reduced target of 33,000GWH (down from 41,000Gwh), the Coalition has pulled the certainty that the renewable energy industry has craved by back-flipping on its commitment to put off the next review until 2018, or even 2020.

The market remains overburdened by excess base load capacity. AGL has suggested 9,000MW of coal fired generation is surplus to requirements. Gas-fired generators are suffering the most because the rise in gas prices has pushed them out of the market. This is despite the fact that many are newly built – in fact, more gas and coal fired generation capacity has been built in Australia since 2009 than large scale renewables.

AGL Energy is now arguing that the Coalition government should impose emission limits on remaining coal fired generators as a way of forcing excess capacity out of the market. Forcing closures based on age would also be effective. AGL can argue this because its fleet is younger, cleaner and more efficient than most of its competitors.

anglesea protests

Environment Victoria CEO Mark Wakeham said the closure had wide community support.

“What this episode shows is that leaving the closure of old power stations to corporate decision making means there might not be time to diversify local economies before job losses occur,” Wakeham said.

“With significant oversupply of electricity generation in Victoria, Anglesea will not be the last power station to close suddenly. State and Federal Governments need a plan to continue the phase-out of dirty power stations that supports communities and minimises disruption

Friends of the Earth Alcoa’s decision respects the community’s vision. “
“Alcoa’s decision sets a precedent. It shows that community’s can revoke the social licence for coal to operate,”   said Leigh Ewbank, Friends of the Earth’s renewable energy spokesperson.
“The Anglesea community’s campaign effectively made this polluting coal plant plant a stranded asset. Coal operators must be wondering which coal-affected community will be next to revoke the social licence.”

 

  

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  • Glen S

    This is awesome news, ABC reports shutdown is scheduled for August.

  • Pedro

    Good news. Hopefully more closures to follow.

  • Steve Young

    Lets not pretend Alcoa is closing the plant for any reason other than economic. They didn’t initially close it as they were attempting to offload an asset as a going concern. The ability to sell an aging small brown coal plant in an oversupplied market was always going to be ambitious. Alcoa have now conceded it is a lost cause.

    • mike flanagan

      Indeed Steve! And if this represents the economic model being adopted by the governments of the day, it presents a future of economic chaos and social dislocation when transcribed into the total of the energy sector, agriculture sectors, mining, and transport to name a few. The opportunities to set about the restructuring of industries is being sadly lost in the Abbott government’s political procrastination and saboteur’s agenda.

  • Jacob

    Where is Tony Abbott now.

  • lin

    This is a good start. If only we had a price on CO2 emissions (or even a price on other pollutants freely added to our environment), we might see some more of these inefficient, old, highly polluting power stations and their dangerous associated mines shut down, rather than closure of the newer, more efficient generators. I guess we can all thank Tony for this perverse outcome.

    • Pedro

      Not bad thinking there. If we can’t manage to get a price on carbon because it is a ‘harmless, colourless, odourless gas’. Then put a price on carcinogens and particulates. While you are at it also a fair price on water usage and water thermal pollution.

  • Blair Donaldson

    it would seem that coal isn’t good for Alcoa despite what our seriously deluded PM says about coal.

  • phred01

    With the smelter shut, power station closing & 3 car makers we are turning into a banana republic under the rabbit watch

    • Jacob

      Exactly. We could be exporting solar panels or get the next gigafactory here, but no, Abbott and Campbell are hell bent on trying to export dirty filthy coal that India’s energy minister does not want to buy.

      • phred01

        The reason for the support of dirty coal export is it’s like tobacco industry Rabbit was against plain packaging. Dirty coal are bank rolling lib party coffers

        • Jacob

          Right. We absolutely need taxpayer funded election campaigns.

  • Tim Buckley

    The closure of Anglesea is a small but important step forward in the inevitable transition of the Australian electricity system towards a lower carbon future. Aging, polluting and increasingly cashflow negative thermal power plants around Australia will increasingly be facing decisions for permanent closure.

    AEMO needs to step up. Leaving rationalisation of excess electricity generation capacity to market forces will work, but will also be chaotic, particularly in terms of the impact on local communities. We need an orderly transition with a phased, co-ordinated closure of capacity across East Australia.

    Electricity demand across Australia has been falling for six years, thanks to excessive retail prices driving the uptake of energy efficiency initiatives by industry and households. This trend will continue, as will the uptake of new renewable energy capacity (with Telsa likely to drive the next major step up from 2017). More thermal capacity closures are therefore inevitable – maybe a plan might be a good idea?!

  • Ken Dyer

    I draw everyone’s attention to the chart that shows the SRMC (short run marginal cost) of Australia’s coal fired power stations, Hazelwood, Loy Yang A and B. The figures shown do not include the carbon price, or if you like, the amount that everybody will pay in future for emissions from these fossil fuel burners. These figures are estimates, it also should be pointed out, and do not represent the true cost of the electricity generated.

    According to the “Fuel resource, new entry and generation costs in the NEM” report prepared for the Inter-Regional Planning Committee in 2009, the SRMC without carbon costs in 2014-15 for Hazelwood was $2.30 per MW generated (with carbon cost $43.57), Loy Yang A, $2.08 without carbon, $35.30 with, and Loy Yang B $ 5.70 without carbon cost and $40.23 with carbon cost included.

    In other words, the cost of carbon per MW generated in 2014-15 is expected to total for these three power stations, a total of $119.20. What is worse, this cost is estimated to increase to $156.54 in 2020, and $210.63 in 2029.

    Anglesea’s SRMC without carbon was $5.73, and its SRMC with carbon was $38.40, which is very close to Loy Yang B’s costs. This should be the next target of the State Government to close down. After Angelsea, it is the highest polluting, highest cost power station in Victoria.

    • Ron Horgan

      Hi Ken, I am intrigued by the $53 million compensation for Angelsea
      If I bought the whole shebang for $1 and then closed it, would a grateful taxpayer then pay me the moolah?
      Does the ESAS underwrite stranded assets that are no longer economically viable? My associate Arthur Daly would be pleased to take such easy pickings to some warm balmy place in the sun and raise a small memorial to the beneficence of the Australian taxpayer!

  • juxx0r

    “it had high sulphuric content, making it a controversial polluter”

    If we just put a price on these other pollutants like arsenic, sulphur, mercury, selenium, etc etc, then Tony Abbott’s head can stay rectally implanted and we can get on with removing the pollution along with the rest of the world. I really think we should price pollution of poisons rather than banging on about climate. Who’s going to say that mercury in drinking water is good, or sulphur dioxide in lungs is a good result.

    • Pedro

      Totally agree. There should be no free ride for these polluters. No one else expects to dump their rubbish in the landfill for free.

      • juxx0r

        Further more, unlike climate change, nobody can deny that it’s happening, Joe Hockey can’t claim that mercury fumes look pretty coming out of smokestacks, and it can’t be claimed that it’s a UN conspiracy.

  • Roger Brown

    Yes , very good news! But , for 46 yrs it has been polluting this planet and if it was a Nuclear Power Plant , it would cost them lots of $$$$$ for the next 50 years ,making it safe ? So are they going to start filling in , a large polluted hole ?

    • Michaelinlondon1234

      Yes apparently they are going to go around every environmentalists home and strip them of all metals to fill the whole.