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Liddell: It would cost $900 million to keep it open another 10 years

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Liddell Power Station

Liddell Power Station

As Coalition conservatives – led by former prime minister Tony Abbott – continued their push to keep the ageing and increasingly decrepit Liddell coal-fired power generator open for another five years, on the pretense of keeping the lights on, the people running the plant just want it to close.

During a tour of the Liddell coal generator in the Hunter Valley, organised by its owner AGL Energy, plant manager Kate Coates made it clear that the management, and the staff, were very much in favour of its closure.

The company said it would cost around $900 million to keep it open another 10 years, as requested by the federal Coalition. Already, AGL has spent $140 million in the last three years and plans another $160 million to keep it open until 2022.

Coal stockpiles are also being run down, and it is difficult to find new coal, particularly at competitive prices. Despite the Coalition government wanting to keep it open, their quest is looking increasingly foolish with the only mooted buyer – Delta Energy – reportedly dropping its interest on Monday.

Also dropping are the odds on the plant being kept open. According to online bookmaker sportsbet.com.au, it is offering betting odds of $1.60 that the plant will be decommissioned, $2.88 for another five year commitment past 2022 and $5.00 that the plant will be sold.

The NSW government is the $2.00 favourite to purchase the plant should it be put up for sale – Clive Palmer is an outside chance on $51.

“The plant really did look very old and clapped out,” said ITK analyst and RenewEconomy contributor David Leitch, who is on the tour of the plant, and who wrote these two analyses last week on the costs of keeping Liddell open, and what could replace it.

Leitch said Coates had spoken of the importance of allowing employees to be able to plan their future, but who were now facing increased uncertainty. A new poll from The Australia Institute suggested that people living in the area surrounding the coal plant also overwhelmingly support its closure.

David Leitch and Giles Parkinson will discuss Leitch’s trip to Liddell – and his visit to its biggest customer, the Tomago smelter – in this week’s Energy Insiders podcast, to be released on Wednesday morning

(Note: This story headline has been changed to make clear $900 million cost is to keep open for another 10 years).

(Note: This story has been amended to include a photo of the Liddell power plant. The original version used an image of the neighbouring Bayswater coal plant.)  

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  • Dee Vee

    Lets see the breakdown of those costs, sounds like rubbery figures from the usual suspects. If we can find enough black coal to export to Japan, and they can produce clean energy cheaper than we can, there is obviously something very wrong with that $900m figure.

    Considering there are any number of coal mines on their doorstep, the “trouble finding” coal doesn’t even pass the pub test.

    • May be you should go to a different pub. Leitch explained the coal issue in his previous story – Liddell is running out of its subsidised supply, so any new coal will be expensive. This backed up by other media stories highlighting difficulty finding room on line cos of focus on exports.

      • Dee Vee

        No need, the pub of reality is fine with me. You may not be aware, but the reason the power stations were built where they are, is because that is where the coal mines are. They are literally on their doorstep. If AGL are saying they can’t get by with un-subsidised coal, then they are lying. Its just not possible for our non-subsidised coal to be exported to Japan, and used to generate electricity far cheaper than our electricity costs here.

        • Patrick Comerford

          You seem to be long on opinion but short of facts to support your assertions. You would be a bit more credible with some links to back up your claims.

        • Joe

          Dee Dee please show us all where this ‘non subsidised coal’ is being hidden.

    • Ken Dyer

      If you had bothered to do some analysis apart from voicing a view gained through the bottom of a beer glass, you would find that the coal suppliers are already putting into place export initiatives to take over supplying coal to Liddell.

      http://www.miningmonthly.com/coal/markets/coal-mines-prepared-for-liddell-closure/

      Liddell is just about stuffed, and would cost millions to refurbish. However, it is cheaper at the moment to run that renewables (that is, when it runs).

      The real question is, how much would it cost to build a new coal fired power station versus a renewable energy power station, given that Liddell is one of the dirtiest, if not the dirtiest power station in Australia.

      The Finkel Review has the answer. The projected price for new supercritical coal power comes in at around $75/MWh from the recent Finkel review of the National Electricity Market, based on data produced by Jacobs Consultancy.

      These projections for new supercritical coal power are higher than the
      recent prices for newly installed wind power (outlined earlier in the
      FactCheck) at around $60-70/MWh in current prices over the 20-year contract period (which is similar to a levelised cost).

      These are exactly the sorts of facts that the Turnbull Government and the Murdoch muckrakers do not want you to find out. You are being treated like an idiot by them. But never mind, have another beer, and keep your beer googles firmly attached.

      • Steve159

        Ken
        That $75 per MWh – is that taking into account the impending, and inevitable price on carbon? Obviously not (since no price has yet been set). So that’s a best case scenario, and one that can only get worse, given that on this site today, Christian has reported a 30% drop in the cost of utility solar in just this last year.

        Facing a price on carbon + decreasing cost of utility solar, who’s going to stump up a few billion for a new coal station?

        • Coley

          Even without a ‘carbon price’ anybody who thinks the ‘projected costs’ of a new build FF power station, once agreed, wouldn’t then go through the roof is living in a dream world.

      • David leitch

        Ken

        Thank you for the link. There is still a shortage of coal unless you want to pay export parity price. The domestic coal power stations use 20-28% ash which is lower spec/dirtier/hurts the life of the power station than export spec coal (14% ash). If you pay export parity you are looking at a fuel cost of over $50 mwh.

  • Blair Walsh

    My cynical belief is that AGL is closing Liddel to keep supply tight and push up prices so their other assets can make a bigger profit, perhaps I wouldn’t be so cynical if they were willing to sell it.

    They will still have Bayswater & Loy Yang A producing 4.8GW of baseload coal power probably for the next 20 years, makes perfect business sense because no one else is going to build new coal and they can reap bigger profits without spending a cent.

    • The best way AGL could keep supply tight and minimise competition would be to keep it open, because it would crowd out new renewables and other sources of dispatchable generation. Gosh, here I am defending AGL. who’d have thought.

      • trackdaze

        Which is precisely why the LNP are pushing for it and uncertainty to continue spooking investors.

      • Fizzelen

        They could also let it “fail” occasionally to push up the price and call for Government money to fix it in the National Interest.

      • Cooma Doug

        It’s a tough complicated question. But it wont take much load side response products kicking in to render Liddel out of the game. Liddel is the old fat unfit hooker on the bench.
        He will get a run because of some old game rules about reserves. But in the second half the rules allow us to use the young fast fit youngsters.
        We can still win the comp. We are not the cowboys. We are looking more like Melbourne right now. But we have to play this semi final first. I just hope the coach Mal stops scratching his nuts and picks the best team.

    • Chris Fraser

      But this closure is an AGL planned thing. Flexible sources are crowding out desire for congested ‘undispatchable’ coal. The good AGL fleet will more than provide that future need. The dogs, in the meantime, have to close down.

    • Cooma Doug

      In this wholesale market, the plant that makes the most money doesnt run much.
      Peaking plants with capacity factors 5% and less.
      To make money now the last plant you would purchase would be Liddel. It cant respond quickly and market rules pretty much spoil any gouging options.
      Would you buy you grand mother a 2017 corrolla or a 1972 model.

    • Mike Shackleton

      Your argument might hold some water if new solar and wind projects weren’t being built, planned or proposed in record numbers. Just have a look at the number of renewable energy projects on the drawing board on this site. The number of proposed projects in SA is astounding. NSW is the nation’s laggard, but they are coming into fruition. If AGL don’t build renewables themselves, someone else will come in and build them and undercut the wholesale price.

  • Joe

    Delta Energy out of the running and now …Turnbull & Co Energy…. IN the running. At $900 millions that is a steal….a STEAL of taxpayers funds!

    • Chris Fraser

      Definitely taxpayer funds. Even Turnbull is not good for that amount …

  • Mick

    P.S. Not a photo of Liddell (that’s Bayswater). Easy way to tell : Liddell doesn’t have cooling towers

    • Joe

      Liddell…no Cooling Towers? Ah, so that’s why Liddell carked it last February in the heatwave. That’s where Turnbull & Co Energy needs to spend…on $900 millions worth of cooling towers to keep the joint running forever.

    • Cooma Doug

      Those are smoke stacks.
      I cant see a cooling tower.

      • Rod

        New narrow version for better aesthetics. 😉
        Unless of course, Giles has switched photos.

  • Andrew Thaler

    lets not forget that Tomago was forecast to close in 2017.. but has only stayed open due to high primary aluminium prices over this last year.
    As soon as those prices revert to 2015 levels, Tomago will close for sure… and there will be a spare GW of power… which currently comes from liddell.

    • Rod

      I read a piece last year how EU fuel efficiency standards and
      EVs would drive an uptake of Aluminium in vehicle frames, panels, parts etc. At the time Aluminium was $1700 per tonne, now $2100? I missed that boat.
      Point being, maybe Aluminium prices will stay up for a while.

  • john

    Evidently on the news tonight on ” TV ” will be a walk around of the Liddell Power Plant.
    Expect to see how old and decrepit it is.

    That is the News

    The real message is we as in Community, State Government, Federal Government have to put in place replacement of supply and Storage of Energy to replace this supplier of energy.

    Is there any question about the direction we have to move?

    My answer is ::::—->>>>>> Get on with it !!!!!

  • Ian

    Giles and David. There appears to be a link between Liddell power station and Tomago smelter. How much does Tomago pay for electricity? Is there a direct subsidy involved? If Liddell closes is AGL liable to supply Tomago from other sources at the same contracted price? This seems like a great story: the Sublime being supplied by the Ridiculous.

  • Joe

    Saw the 7pm news on The ABC last night (19/9 ). A tour of Liddell and all that the cameras saw was the magic ‘do not cross’ plastic barrier tapings all over the place. Now if only Andy / AGL could have put some of that ‘magic tape’ money into doing up the joint / Liddell then us taxpayers wouldn’t need to chip and do the job. But seriously every where the cameras went nothing was in working order….the lifts, boilers…all dead. Have to wonder what it is that Turnbull & Co Energy see that is worth salvaging.

    • RobS

      the only thing they see worth salvaging is donations from fossil fuel companies and lobby groups.

      • Joe

        I think you nailed it!

  • Ian

    Imagine the wondrous levels of innovation that could be achieved if they spent $900 M on renewables and related solutions