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.
Keeping old coal plants open won’t deliver the reliable, affordable energy our customers need: https://t.co/vY0WJGkEBS
— Andy Vesey (@AndyVesey_AGL) September 5, 2017
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.
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).
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.