AEMO says AGL plans more than enough to replace Liddell

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AEMO report says AGL’s plans to replace Liddell with new dispatchable technology more than enough to address any shortfall. Not that you’d know that if you relied on mainstream media headlines.

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Liddell Power Station
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Liddell Power Station

The Australian Energy Market Operator has endorsed AGL Energy’s plans to replace the soon-to-be-closed Liddell coal plant in New South Wales, saying that they are more than enough to meet the potential shortfall created by the closure.

In a report to the federal Coalition, which had lambasted AGL over its Liddell closure plans and had attempted to force it to keep it open a further five years, AEMO says the closure will leave a shortfall of around 850MW of dispatchable capacity.

But AEMO says AGL’s plans for renewables, storage, demand management and gas generation – should they be delivered in full by AGL, or by another party – would deliver at least 1,000MW of new dispatchable capacity.

“In its entirety, all three stages of AGL’s plan would deliver sufficient dispatchable resources to fill the identified 850MW resource gap,” AEMO writes in its letter to federal energy minister Josh Frydenberg.

It says the plan pushes the risk of load shedding to a one in 20 year event.

AEMO notes that AGL, which only confirmed the decision to close by 2022 in December, had so far only committed to a $200 million upgrade of the Bayswater power station, but said that the rest of the capacity outlined in AGL’s three phase plan would be sufficient.

It did note, however, that if other market participants stepped in with their own plans – be it for battery storage, pumped hydro, gas generation, demand management – then AGL may no longer see an opportunity to go ahead with its third phase (which is mostly a 250MW battery storage unit).

AEMO’s assessment was requested by the Coalition government, which was disbelieving about the ability of new technologies to replace an ageing, and an increasingly unreliable coal generator

AEMO’s base case was more or less unchanged from its assessment last year: that if the market did not respond to the Liddell closure with new dispatchable capacity, then there was a heightened risk of a supply shortfall and a risk of outages, particularly in very hot summer days.

And mainstream media – who were given copies of the report and Frydenberg’s response by his office a day ahead of RenewEconomy – snapped their heals to attention and chose to echo the Coalition talking points: i.e. what might happen if AGL, and other market participants, chose to do absolutely nothing.

“Closure sparks blackout warning,” headlined Rupert Murdoch’s The Australian on its front page (see internet post image to right).

“Blackout fears as AGL lags on plan,” thundered Murdoch’s Daily Telegraph.

Closing Liddell could cause blackouts for 200000 homes: AEMO, the AFR said.

Warning of power shortfall risk after closure of Liddell plant, wrote the Guardian.

“Blackout risk without better power plan,” said both Nine News and The West Australian.

The mainstream media’s focus on blackout risks has been consistent. It continually warned of blackouts over the past summer, even though AEMO repeatedly underlined the fact that these scenarios were only their “do nothing” outcomes.

We wrote about it at the time – Blackouts and baseload: Debunking myths of AEMO reports and Liddell.

In any event, there were no blackouts caused by a lack of supply over the last summer, much to the disappointment of many in the conservative media who had been calling for them to show that renewables do not work.

Frydenberg’s press release in response to the AEMO report on AGL’s plans for Liddell also focused on the “do nothing” outcomes.

“Without the implementation of AGL’s full plan or equivalent investment by others, AEMO has concluded there will be an 850MW shortfall in dispatchable power and in their words ‘a high risk of load-shedding’ following the closure of Liddell,” he said.

“The existence of a major shortfall in dispatchable power following Liddell’s closure would clearly present an unacceptable situation undermining the stability of the system.”

Predictably, he used this as an argument for the National Energy Guarantee,

However, AEMO’s report, while mentioning the NEG, was largely devoted to the need for a strategic reserve of distributed generation and flexible load, and its hope that it can get other members of the Energy Security Board to agree.

It says that the NSW grid – which relies on coal generation more than any other grid in Australia – is heavily dependent on imports, and at increased risk of failure from one of its big fossil fuel generators, particularly under more extreme weather conditions.

The Liddell units suffered repeated outages (half of it was unavailable for most of summer), as did many other coal generators in NSW, Victoria and NSW (More than 50 trips, or sudden outages).

AEMO says extreme heat is placing more stress on coal generation, and more wind and solar mean more weather variance. It wants a strategic reserve over and above the AGL plans to ensure that it can meet the one-in-10-year trips inherent “of our ageing generation fleet, weather and climate impacts.”

However, it has met resistance from the likes of the Australian Energy Market Commission, and many of the bigger players in the market place, who fear such a mechanism could dampen their revenues.

It says that if the NEG is not implemented by the end of the year, then it wants another mechanism put in place to ensure that the capacity of Liddell is replaced.

The Coalition has not just fought against the closure of Liddell, but many members continue to argue for a new coal-fired power station to be built – despite the complete lack of interest from the private sector.

AGL said its proposed mix of wind, solar, pumped hydro, battery storage, gas and demand management (see above) would be significantly cheaper – averaging $83/MWh compared to the $106/MWh cost of extending the life of Liddell.

It said its plans incorporated a mix of technologies in a market where the cost of renewable technology is falling and more flexible, peaking generation is required, and its investments would be staged so as to be flexible enough to respond to improvements in technology.

Most importantly, it noted that an independent assessment of AGL’s plan found the replacement generation is more affordable at $83/MWh, compared with extending Liddell at $106/MWh.

Frydenberg sought to downplay this conclusion, saying that this only represented a cost to AGL, and not the “cost to the system”, without explaining what he meant by that or how that increased cost was calculated.

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32 Comments
  1. Steve159 8 months ago

    “fly on wall” scenario, inside LNP headquarters.

    “Ok, who do we have to sack at the AEMO in order to get some of our guys in there, so we can get a better report?”

    • RobertO 8 months ago

      Hi Steve159 and another question that the fly on the wall heard is “Can we make the AEMC incharge of the AEMO”

      • Joe 8 months ago

        ….John Pierce leading the Big Show?

        • RobertO 8 months ago

          Hi Joe, Yes we still need the cart leading the horse. How else can you be accused someone of being backwards if you do not put the cart in front of the horse.

      • Alastair Leith 8 months ago

        Which is why ALP & Greens policy should be to end the AEMC and role it’s authority (but not personel) into the AEMO. Greens policy is actually to nationalise the grid last time I looked at national policy, so that would effectively end the market anyhow. No need for John Pierce with no market.

  2. JoeR_AUS 8 months ago

    Its simple!

    AGL can do what it likes but it cannot pass on its costs ie price ceiling in place, 10% above the going NEM rate, even if pays 10 times to the “Australian Energy Market Commission, and many of the bigger players in the market place”

    Its about time the operators make a loss and not just pass on the charges to the users…. This will sharpen their focus.

  3. RobertO 8 months ago

    Hi Giles
    I love this statement
    “However, it has met resistance from the likes of the Australian Energy Market Commission, and many of the bigger players in the market place, who fear such a mechanism could dampen their revenues.”
    I think you’re completely wrong. They are about to lose their revenues completely if they have been banking on coal only. AGL has started to move so it will reduce their dominance in the market place (and their losses). I suspect that coal will be gone quicker that any plans I seen so far (and that the Fed Gov will do things to stop the loss of coal at taxpayer costs if they remain in power after the next election, taxpayers will pay for new coal power station despite the losses it will incur). It not their money so they do not care about the losses and they generally do not believe that pollution is of any risk to the planet. CO2 is just one form of polution, there Sulphur Dioxide, Murcury (and others) and one that a lot of people miss is simple “Heat”.

    • Alastair Leith 8 months ago

      NOx, SOx, PM10, PM2.5, PM1, carcinogens, heavy metals, benziantes, isotopes, VOCs…

      • RobertO 8 months ago

        Hi Alastair Leith, I am getting sick just reading your list. Thank you!

    • solarguy 8 months ago

      That’s the problem, by all accounts they have been banking on coal only!

  4. Ray Miller 8 months ago

    Most of the media have demonstrated their gullibility again, with truth again taking another hit.
    I see the only way out of this is for AGL is to bring forward the implementation of its replacement, especially in light of the demonstrated unreliability (and growing maintenance costs) of the Liddell plant.
    As for the performance of the Environment and Energy Minister, he again proves he in not worthy of the job.

  5. Mark Fowler 8 months ago

    I wonder if the main stream media has realised that these types of scare stories are excellent for driving the installation of home solar systems as people choose to take charge (pun intended) of their energy requirements rather than risk the predicted catastrophe.

    • john 8 months ago

      Predictions are that NSW will have a higher penetration of Solar than Qld shortly.

    • Alastair Leith 8 months ago

      Do the MSM know that hype and fear sells newsprint, gee dunno?

    • Barry Alternative Fact Covfefe 8 months ago

      This is icing on the cake, believe lies, help renewable energy, don’t believe lies, help renewable energy. If true i like this scenario.

  6. john 8 months ago

    Minister Frydenberg was on RN this morning repeating the party line loss of stability, blackouts AGL must keep Liddell open.
    Scare the punters is the message.
    With the noted 50 plus failures with the thermal power units this summer it does not exactly paint a good picture of stability does it?
    Pity this information was not made public.

    • Dee Vee 8 months ago

      Failures happen when you don’t do maintenance on plants, and there is a perverse incentive make millions of dollars when failures do occur.

      AGL should be fined heavily when capacity is lost on the network, not rewarded by FCAS begs them to make up their own shortfall with $9000 per megawatt rewards, instead of the normal $20 they get when they are producing enough electricity.

      • john 8 months ago

        Yes it is a back to front situation, where failure is rewarded, however installing a whole heap of storage especially near usage areas as in towns, just may take that lunch time snack away from the existing generators.

  7. Chris Fraser 8 months ago

    Energy could be considered an Essential Service under s4 Essential Services Act 1988. The State Minister would have powers to direct the replacement of generation loss, by simply giving an Order.

    • Jolly Roger 8 months ago

      Yes but they know that if that was done due to a lie about some kind of inaction that wasn’t actually occuring they would have their pants sued off them.

  8. Patrick Comerford 8 months ago

    You comments on the MSN reaction to this AEMO reports are spot on. I was disappointed once again with KMurphy and the Guardians pathetic reporting exactly as you mentioned. Just like any fair assessment of Labors “Pensioner tax” BS. And the Guardian for one has the hide to continually solicit for a donation. Well I’d pay good money to keep reading actual factual reporting from Reneweconomy but I’m blowed if I’d waste any money on MSN BS including the Guardian.

    • Alastair Leith 8 months ago

      I got a flee in the ear on Twitter from K. Murphy for drawing attention to her bias and misreading of the current energy politics. Like many MSM journalists and opinion columnists she is fiercely loyal to her own ignorance on some matters.

      • Hettie 8 months ago

        My comment on another Guardian piece, because KM’s load of tripe was a comment free Zone, gave her a proper serve for bias, got 4 up votes and some solid endorsement replies in 20 minutes, but was taken down after 25 minutes. Does not meet community standards. Bollocks. And comments were then closed.
        I included the line,
        Might as well say that a new aircraft won’t fly if it is not built as designed.

  9. Joe 8 months ago

    Has ‘Climate and Energy Expert’ Chris Uhlmann had anything to say so far? I’m sure that the whole country is hanging out for more of his ‘words of wisdom’.

    • Rod 8 months ago

      He was doing a mid morning breakfast show last time I saw. Much more befitting his ability.

      • Joe 8 months ago

        Oh dear, relegated to the mid morning dead zone time slot. How the mighty have fallen.

  10. howardpatr 8 months ago

    Turnbull, Frydenberg and the Coalition’s lackey and eminent fossil fuel lobbyist, Lord John Pierce, Chairman of the AEMC, might, (if they haven’t already), get the knifes out for Audrey Zibelman’s back.

  11. DogzOwn 8 months ago

    Will dinosaur Yallourn not be euthanased before Liddell? If not why not?

    • Glynn Palmer 8 months ago

      Yallourn was commissioned in 1980, which gives it until 2030 to reach its retirement date. It is the most emissions intensive plant left in Australia at 1316kg/MWh. It is 1480MW capacity which would need some planning lead time to replace.

      Liddell was commissioned in 1972 which gives it until 2022 to reach its retirement date. Being black coal it has a lower emissions intensity at 981kg/MWh. It has a capacity of 2,000 MW but as has been stated in this article, half of this has been unavailable due to its challenged age infirmities.

  12. bedlam bay 8 months ago

    Oily Fryberg spoke today with his stock in trade sophistry and mendacity. He needs to asked about the all too frequent failures of coal fired power station units. He is totally shameless with his insults to the intelligence of the public. Howard has a lot more rat cunning with his plausible deniability.

  13. Andy Saunders 8 months ago

    “pushes the risk of load shedding to a one in 20 year event”

    That’s a highly-dodgy prediction! They’d have to accurately forecast demand (including peak demand), and generation retirements/new-builds/enhancements, over decades. No-one gets that right!

    Could easily be an order of magnitude more, or less, with just a tweak of the model.

Comments are closed.