AGL says only renewables will provide new “baseload”, not coal

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AGL ridicules Coalition push for new “baseload” coal plants, saying that the only new “baseload” would be renewables, with gas or storage. “There’s a lot of misinformation out there,” says CEO Andy Vesey.

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One day after the PM appeared to throw his support behind the development of a new coal plant for Australia – to shore up the nation’s “continuous power sources” – AGL Energy CEO Andy Vesey has delivered a couple of energy market home truths and clarifications: renewables will be the only source of new baseload energy in Australia, and coal cannot compete.

In the opening address at Australian Energy Week in Melbourne on Wednesday, Vesey – who heads the country’s biggest owner of coal-fired power station – said that technology was driving the new market direction, which was to large-scale renewables, firmed up by gas and soon battery storage.

The only coal plants that would be built, he added, would be “bespoke” – rather like an expensive, made-to-fit suit.

“There’s a lot of misinformation out there,” Vesey told the conference. “I hear a lot of different things. The fundamental issue is technology is driving this new direction.

“What’s the new baseload for us? It’s going to be large-scale renewables. It’ll be firmed up by probably open-cycle gas and, eventually, when storage comes down, that’s what it will be.

“We don’t see anything baseload other than renewables,” he said.

Yet, he continued, “you’ll hear people tell you how coal, it can compete. But… all you need to think about is economies of scale of production versus economies of manufacturing.

“Solar plants, the more you make the cheaper they get. …Wind turbines, the same thing. The more you make the cheaper it gets.

“It would work with (coal) plants too. …Large coal plants, supercritical plants and even what I hope comes around one day, carbon capture and sequestration; the more you make the cheaper they’ll get.

“But guess how many you’re going to make? They’re bespoke. Prices of large-scale generating plants haven’t moved in over 20 years,” Vesey said.

“The starting points today, even when you firm up renewables so they look exactly like the same capacity as large-scale …fossil generation, we believe the numbers tell a very clear story.”

In reference to the Finkel Review on energy security, Vesey said that whatever was decided, bipartisan support was critical to enable a smooth transition, considering that transition was happening already, with or without the blessings of the policymakers.

“We’re not waiting for clarity, we’re not waiting for certainty,” he said. “Would it be good? Absolutely. To get bipartisan support would be an amazing way to unleash the energy and investment that people want to make in this system. That is the thing what will ultimately drive down prices… that’s what you need, is investment.

“And nothing gives you investment like policy certainty,” he said.

“(The Finkel Review) is just about getting something that people can agree on, and saying, ‘We’re done with this now, these are the rules – invest’.

“We’ll invest and we’ll compete in the market, and y’all can decide which is the best deal or the best solution, but let us know what this boundaries are. Because what we’re doing now is not sustainable.

“Storage being efficient, and the other pieces, yeah we have to wait for those prices to come along and that’s why you need some kind of transition mechanism.

“I would have called that transition mechanism an EIS, but you can call it anything you want. Because you want to manage a smooth transition. Because in our market, when you don’t have smooth transitions… bad things happen. What are those bad things? Price spikes.

“Remember, that at the end of the day, unless we can stimulate new investment in the system, it will not be a question of price, it will be a question of who pays. Because at the end of the day, somebody pays.”

See also, AGL proposes virtual rooftop solar scheme for renters and apartment dwellers.

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72 Comments
  1. Chris Schneider 2 years ago

    “One day after the PM appeared to throw his support behind the development of a new coal plant for Australia ” That’s bullshit! Please explain how you come to that conclusion. He was asked directly (not quoted) if the market wanted to build a coal station would this be accepted he responded (not quoted) the federal government is going to be agnostic in this. He was pressed for the sound bite they wanted “Liberals want coal” so they asked it again a different way. He said basically any proposal will be looked at.

    This site is getting tiring with your continued bias reporting. The fact is there are Liberals who want coal, Malcolm must walk a tight line to not alienate them while moving forward on his actual agenda, that is all you need to read into what he said. He know where the market has moved (which is why he uses the words he does) and would welcome this press release (which supports he’s thoughts). He is a centralist.

    • Giles 2 years ago

      Turnbull’s words “I would love to see a new state-of-the-art coal power plant” in Australia. His words. Yes, the right wing of his party insist he play charades. Others are looking for leadership.

      • Giles 2 years ago

        p.s. i don’t think there is anything he has said in last year about climate and energy that makes him a “centralist”, apart from his stuff on snowy hydro.

    • Jo 2 years ago

      “… the federal government is going to be agnostic in this.” This is Newspeak ( http://blog.oxforddictionaries.com/2014/09/george-orwell-newspeak/ ) for ‘we want more coal!’

    • Chris Schneider 2 years ago

      You really need to listen to the speech… https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2Fmalcolmturnbull%2Fvideos%2F10155526714356579%2F around 18 minutes on the video, it’s misrepresentation to say that was support for a new coal power station. He said “it would be nice to have given we are the largest exporter”. It would have been nice to have a gold plated internet service but he wasn’t going to throw his weight behind that either.

      As for the Newspeak crap. No he is trying to step away from picking a winner in EVERYTHING. He is saying the Market will tell us. Governments are more likely to pick wrong than right every time! They need to support the network and Snowy 2.0 is the biggest nod to Renewables you will get from him, I think. It was the smartest manoeuvring I have seen from him politically. Supporting renewables, guaranteeing the grid reliability during the transition all while using the political capital that is the Snowy scheme.

      • Giles 2 years ago

        I did listen to the speech and those are direct quotes. “Smartest manoeuvring I have seen from him politically” Yes, that’s the issue, this is not about policy, it’s about politics. It is about his job. Thankfully, he will have served longer than Abbott as PM within a few months, so may be then he can show leadership.

        • Chris Schneider 2 years ago

          The manoeuvring is about moving the Liberals toward the centre on Climate change without them being able to object, that is what I was referring to. Snowy was his great move. He is able to support the renewable market while staying true to the “market”, he is taking away the reliability burden on renewables and at the same time able to say well if coal can compete (which we and he know it can’t) then have at it. Hazelwood was shut because it was financially viable to keep it open, how do you think new coal would fair?

          • Giles 2 years ago

            Yes, I’m aware of the manoeuvring. Hunt used to argue the same thing. But as i said to him at the time, you still don’t need to say some of the sh** you do. I’d suggest we agree on many things apart from characterisation of Turnbull. I’d love to see him do something concrete, he hasn’t yet. and his politicking on south australia etc has been harmful, if futile.

          • Chris Schneider 2 years ago

            I agree on SA I was a little shocked that he took that stance. SA is a perfect testing ground for the world! It’s quite cheap to try things there! such a small system 1GW of supply is nothing compared to TWs in the US and China!

            I look forward to seeing the Sea Water Hydro!

          • Peter Campbell 2 years ago

            I too really do wish he and Hunt would not say some of the sh** they do. I just wonder, is he really that precarious that he couldn’t just read the riot act to his loopy outer right fringe? Where are they going to go? I expect a lot of people who might usually vote LNP would love to hear him give them a reason to stay with the Libs. Meanwhile those much further right are not going to vote labor or green.

        • Ian 2 years ago

          When you say serve do you mean like in tennis, or like in a restaurant. In our political system I think it’s about curved balls aimed at out-manoeuvring opponents, and also about dishing out favours. The only leadership you will see is those ahead of the rest in the race for the gravy bowl.

      • DevMac 2 years ago

        I’m only picking on one little point here.
        “The Market” is skewed when the rules defining the market are based on old technology. This has been pointed out on this site for a long time. By not prioritising changes to the market rules, or even mentioning there may be a problem with said rules, he is, at minimum, passively supporting the status quo.

        • Chris Schneider 2 years ago

          100% agree, AEMO are moving to slow in their transition to 5 minute intervals. but I also think there is a smarter way to do this whole thing. get the bidding process going for the entire year. Bidding for non dispatchable (solar and wind) followed by Storage (cost difference and the variability) then for the traditional (Coal and Gas) now that Solar and wind is cheaper this will work great. The cheapest forms of electricity bid first, then the storage than what is left is the needed old stuff. you bid on $ per MW. this would create a good system. the network operator will know how much they should need (10%) and work from there. Storage would give time for Coal or gas to start up to meet their required running times.

          • Giles 2 years ago

            It is not AEMO holding it up, it is AEMC. Two different bodies.

          • Chris Schneider 2 years ago

            Ok, not really that important is it though, given both are not the government (if they want to stay out of the market) if AEMO or AEMC are holding it up it has the same result.

          • Giles 2 years ago

            actually it is incredibly important, because the government can change the regulatory set-up through COAG. AEMO is incredibly frustrated by the neanderthals at AEMC and wants more ability to shift rules to follow the technology change. AEMC has been resisting rule changes for most of the last decade. The rules are the last defence of the old fossils.

          • Chris Schneider 2 years ago

            Giles,
            Malcolm actually mentioned the frustration of dealing with COAG over this. QLD and NSW were hold outs as they owned their systems, remember.

          • Giles 2 years ago

            They were hold outs on limited merits review because they owned the networks. 5-minute rules, demand management, energy efficiency, and everything else is different matter, although some govt-owned generators being fighting these too.

          • Chris Schneider 2 years ago

            From my understanding the QLD government still owns the three
            major suppliers in QLD in corporatised agencies

          • john 2 years ago

            Yes and they so over bid to receive $13,000 a MwH during recent summer that the owner the Qld Gov has told them to stop over bidding.
            So instead of making the profit in 3 days for a year they will have to curtail the practice.

          • FeFiFoFum 2 years ago

            “Storage would give time for Coal or gas to start up to meet their required running times.”

            And thats not how a network dispatch operations works..

            Someone who knows what they are talking about, Vesey from AGL has come out and said there is no room and no need for coal going forward… period. No need to impress voters or party hacks in his case, just stating it as it is.

      • Jo 2 years ago

        But the COALition members cling to coal (I have seen it) and call it agnostic

        • john 2 years ago

          True.

          • Chris Schneider 2 years ago

            Things they need to be doing they weren’t even last year but they are now. They are not required in the market of supply anymore. only in reliability. Something Snow 2.0 and other Hydro projects will bring. It’s hard to say it’s cheaper to supply Solar or wind than Coal and then still demand the government do something to encourage it. The horse has bolted. unless they do something to discourage it it will happen. They need to focus on the reliability. There is a lot that can be done now and somethat will take planning. Reliable supply of Gas is a short term fix which they have now made. Long term Pumped hydro is the answer. Both fresh and seawater. It’s happening. If you think we should be 100% renewables in the next few years you simply don’t understand scale. It will take longer to get there. in that time batteries and Hydro will be required. Hopefully it will be solved before it becomes an issue.

        • Chris Schneider 2 years ago

          He is agnostic in his policy, that’s quite obvious. Some Coalition is very much in support, I totally agree. They are a big ship to change course, think only five years ago the overwhelming majority of people supported coal. It’s no longer the case (unless they get benefit from it) It won’t be long

          • Goldie444 2 years ago

            “It won’t be long”

            Has Australia got the time to wait so as not the hurt the feelings of the “some in the Coalition”?
            They have been doing this for 4 years in opposition and now 4 years in government.

      • Peter Campbell 2 years ago

        Yes, let’s let the market decide. Let’s have an emissions cap and trade scheme that covers everything, transport fuel, agriculture, electricity generation etc. Government sets the cap and leave the rest to the market. Of course, those lefty winner-picking Greenies won’t like it but all right-thinking right-wing LNPers will embrace it. Oh, wait, hang on, what has happened to our neat stereotypes?

      • Joe 2 years ago

        With Climate Change meaning less / little / no snow falling on our Aussie Alps a Snowy 1.0 / 2.0 is no longer Snowy anything. Turnbull just flogging a horse “Snowy” that has no legs in the long term.

        • Chris Schneider 2 years ago

          how do you come to that conclusion? did you have a dream? because no facts bare any resemblance to your thoughts. also 2.0 is pumped hydro it therefore relies a lot less on rain/snow fall

        • Mike Westerman 2 years ago

          Joe if u understood pumped hydro, you would understand why Tumut 3 was built and why it has been operated in the past in the manner it has. You would also understand the constraints and potential of pumped hydro in the Snowy, which are primarily transmission not water.

      • RobSa 2 years ago

        The most effective mitigation of greenhouse gases came about under the carbon pricing mechanism was introduced. Trumballs was part of the Abbott Government that removed the carbon price. Trumballs leads a government that takes no substantial action to mitigate climate change in Australia. Trumballs is a disaster for the country by these actions alone.

    • john 2 years ago

      Actually my last email from him does not support your feelings that ” He is a centralist. ”
      In the email he set out the argument that he is agnostic on supply of generation.

      • Chris Schneider 2 years ago

        Lol, please define centralist. agnostic is being centralist. Forcing Renewables without thought is left. pushing Coal without thought is right. It’s a scale and is a little more nuanced than that but that’s it in a nutshell.

        • Peter Campbell 2 years ago

          There really should not be anything right or left about coal or renewables. The atmosphere just does what it does with greenhouse gases, regardless of politics. The real question is ‘Why are those on the extreme right of politics much less likely to accept apolitical scientific facts?’

    • Ken Dyer 2 years ago

      Let’s try something else. “Prices of large-scale generating plants haven’t moved in over 20 years,” Vesey said.
      I installed a 3kw system in 2010 that cost me nearly $7000. Last week I installed a 6.38KW system that cost me $6595 including a battery ready inverter.

      Hm. no matter how ‘agnostic’ you might be, the fact is that the cost of solar PV (at least in my case) has halved in less than seven years.
      Now if the liberals cannot see this and, more to the point acknowledge the fact that solar is cheaper, then they are just plain ideological idiots in the pockets of the fossil fuel boosters.

      • MaxG 2 years ago

        Of course they are… didn’t know you needed convincing 😀

    • brucelee 2 years ago

      Why isn’t Labour burning them with the exact counter rhetoric, how their markets driven ideology is bankrupt because they won’t allow a free energy market. They won’t allow market mechanisms to firm up and secure the system. Their coal ideology is not cheaper and all the experts say so.
      These facts need repeating over and over and over in Parliament to counter the BS technology agnostic Pro coal rhetoric. Quote vesey in Parliament, quote goyal, quote 55/Mw wind vs markets prices above 100. Swarm with facts, please get organised in opposition!

    • Joe 2 years ago

      Chris, Chris, Chris you have not been listening closely enough to the words that came out of Mr T’s mouth. Giles below has kindly “assisted” in your re-education. The problem for Mr T is that he is so conflicted in being Liberal Leader and PM. On nearly every big issue he is at odds with himself, least not RE and policy to combat Climate Change. Mr T is not fit for purpose in the role as PM which was a job he wanted to tick off his bucket list…job now done time to quit.

  2. DevMac 2 years ago

    By continuing to pander to the minority that is the right-wing of the Liberal party, Turnbull is actively restricting the “jobs and growth” opportunities that renewables will inevitably provide.

    It may talk like a Turnbull, but it walks like an Abbott.

    • Chris Schneider 2 years ago

      Shorten, has proven he won’t help. He only looks for his 15 minutes of fame no matter the cost. with out the right of the party Malcolm can do nothing. Even with them he needs to panda to others. You need to look at reality first before questioning what he is doing.

      • Giles 2 years ago

        If he has to panda to right then we not going to get very far are we. that’s the point. if you were familiar with our website you would have noted the criticism we have laid at Labor. Though i have to point out they were not as polite as you!

        • Chris Schneider 2 years ago

          Politics is all about pandering. To say its bad is simply to say politics is bad. The reason he is able to lean them left is his insistence there are more vote in the middle. Without support there is no ability to lean the party. His morals are well documented. Renewables have a friend in Malcolm and if anyone can move the party to the centre he is it. His history is littered with winning unwinnable fights. This is one of them. It’s a big ship and it needs time to turn. I hope at the next election he is able to shed the right but that will be up to a LOT of other people than Turnbull. If he pushed them he could loss the lodge and then Shorten would spend the next 4 years running around like a bull in a china store.

          • Barri Mundee 2 years ago

            You mean like the carbon tax? He was rolled as leader over that.

          • Chris Schneider 2 years ago

            Exactly, he has learned to be smarter. Politics is always the long way to get to the right answer.

          • howardpatr 2 years ago
          • Miles Harding 2 years ago

            Last time we wished for this, we got Abbott!

            Hyprocrisy may be the anthem of the day, but it’s better than some alternatives.

          • Alastair Leith 2 years ago

            Turnbull is only there to occupy power and preen his feathers. No middle game and no end game, you’re dreaming. What “right answers” have we seen under Turnbull? It’s Abbott with a toffy mask on.

          • Alastair Leith 2 years ago

            Ok, Turnbull could lead though and put the recalcitrants on the backbench (if there’s any who aren’t already there, I guess he can’t send Barnaby there but he could demote him). It was John Winston Howard who introduced a national RET because wind and solar were more expensive than fossil by a lot, even if he was motivated by political self-preservation. Even now wind and solar are approaching and surpassing fossils on costs Turnbull has squibbed every opportunity to lead.

          • daw 2 years ago

            Time to stop all the subsidies on renewables then. They should have been made to promote their cause without subsidy in the first place.

          • Alastair Leith 2 years ago

            Are you aware that historically renewables have received ~2% of the subsidies fossil and nuclear have received and still receive? Hinkley C is the most expensive power station ever I think. Oil still get exploration grants and royalty holidays. Coal and gas still don’t pay a cent for killing people and already accounting for a couple of metres of sea level rise to be played out this century, You seem very confused about subsidies, daw, i can see why a pseudonym is convenient for you!

    • Joe 2 years ago

      Who is this mythical Jobson Grothe…no one I know has ever met the dude.

  3. Greenradagast 2 years ago

    Good old capitalist market forces are driving investment in renewables. It must really stab at the alt-right that the mantra they used to sell capitalism is now working against their ideology.

    • Marg1 2 years ago

      Isn’t it just great!

      • john 2 years ago

        Actually it is companies who actually can look at the alternatives and not be stuck in 1880 tech, who will move forward we do not have to look very far to realise those who do not think forward are left behind when new technology comes along.

    • Vince Heffernan 2 years ago

      To be fair: AGL will still be using coal to generate electricity until 2050, are Australia’s biggest generator of CO2, and are building (proposed) gas fired plants ie; not renewables! Hardly able to take the high moral ground

      • Alastair Leith 2 years ago

        80% Fossil Fuels by 2050 is the offical AGL Policy position as it stands I believe. It’s all very well for Vesy to talk the talk, but AGL bought a bunch of second hand coal and gas plants recently and they did so to make a profit at the expense of the climate and people’s health. Time for action AGL, not more words.

    • Gnällgubben 2 years ago

      That doesn’t make any sense. Any capitalist worth his salt is very much for any technology that makes financial sense. Coal power plants is not an ideology, the reason some people support them is the misinformed idea that they are needed. Sooner or later people will realize they are not.

      • nakedChimp 2 years ago

        crony capitalists want to have a word with you 😉

        • Gnällgubben 2 years ago

          Crony capitalism is not capitalism

          • nakedChimp 2 years ago

            You seem to be under the impression that ‘capitalism’ is some ideal system that somehow manages to arrive at the optimum for all parties involved.. you’re wrong.
            And crony-capitalism is a form of capitalism, same as free-market capitalism and state-capitalism is.

          • Gnällgubben 2 years ago

            There has never been a better system to create wealth and prosperity for people. Capitalism has an unblemished record of actually working, as opposed to the planned economy system.
            Crony capitalism is capitalism only in the head of a socialist.

          • nakedChimp 2 years ago

            Capitalism (like you seem to have in your mind) has no proper answer (wealth and prosperity for all people) for natural monopolies, which there are a couple of (natural resources, infrastructure, executive, legislative).
            Additionally every rational capitalist also tries to create artificial monopolies to increase his personal optimum of wealth accumulation at the cost of others.
            There were and still are some artificial monopolies (not natural) which humankind has overcome over the centuries, but none of them due to capitalism but due to technology or people who did things for the greater good.. things like information (printing books, internet, teaching people reading/writing), IP (open source), communication, energy, money, etc. pp.

            This means, if you have bolt-on-solutions in mind to solve these problems within ‘capitalism’ and still want to label that ‘capitalism’ you might as well include crony capitalism and other dark flavors into your ‘capitalism’ term and stay true.

            IMHO what I think you actually think of when you say capitalism is market economy.

            PS: I’m a believer in the free market economy, if it is designed so that natural monopolies can’t be captured by private interests and there are means in place (that work with humans, not perfect robots like socialism or communism demands) which prohibit artificial monopolies. 😉

          • Ren Stimpy 2 years ago

            Technological disruptions are the cure. Out with the old and expensive, in with the new and cheap.

      • Matthew O'Brien 2 years ago

        People are not misinformed that coal power plants are needed … they are paid to say so.
        Coal folks are either vested as above or sadly ignorant.

        • daw 2 years ago

          I’m not paid anything by anybody Mat O’B but as a realist I know, and say so, that we aren’t any where near being without coal fired gen. It would be good if we could leave it in the ground but that is not reality.

      • daw 2 years ago

        Oh yeah G..n Try switching off all sources of coal and see how much we end up with Then sit back and listen to the howls of protest.

        • Gnällgubben 2 years ago

          Nobody is suggesting to switch off all coal overnight. Coal is dying however, it’s really just a matter of how fast we can build out the alternatives.

    • Jon Albiez 2 years ago

      One big factor is finance. Many local banks are loathe to loan for traditional steam turbine plant but friendlier on terms and interest with renewables.

  4. john 2 years ago

    As a leader of the liberal party it is extremely hard to embrace any type of Renewable Energy because it is cast in the light as a “Carbon Tax”, so Malcolm Turnbull is behind a rock and a hard place he will be cast out once again, if he hints even at any understanding of RE, so he has to phase his words as ” agnostic on energy generation”

  5. Robert Comerford 2 years ago

    First thing I would like to see is a public commitment from Labor that any new coal powered generator contracts will be torn up when they next win office and no compensation will be offered. State quite clearly they are not going to have people locked in to expensive, obsolete and polluting technology, clean coal is a myth!
    That should give certainty to the investors :>)

  6. daw 2 years ago

    Renewables as baseload? Pie in the sky stuff. I would love to see it as reality but it is far from it at the moment. Just add up all the wind and take it way from the total installed capacity and what do you get – bugger all as I type this!

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