AGL spending $760 million on coal generator upkeep, even as it adds new batteries

AGL says it is spending $760 million this financial year on upgrade and maintenance programs on its two remaining coal fired generators, as part of a $1 billion program that is in addition to its new spending on big battery storage.

AGL closed its ageing Liddell coal fired generator in April but still expects the neighbouring Bayswater plant and the Loy Yang A brown coal generator in Victoria to operate for another decade. Bayswater could close as early as 2031, while Loy Yang A is expected to keep burning coal until 2035.

But keeping these plants online, and able to withstand with growing intensity of the summer heat and the challenges imposed by the growing share of rooftop solar, which is eating the energy industry’s collective midday lunch, is not cheap.

AGL says the $1 billion it plans to spend on capital and operational expenditure (including labour costs) this financial year includes $190 million at Bayswater on maintenance programs and in addition to $120 million on unit one, which is having a major upgrade and critical “integrity” assessments.

At Loy Yang, AGL says it is spending $350 million on capital and maintenance across the power station and mine, with minor planned outages expected on units 2, 3, and 4 in the power station and conveyor extensions in the mine.

The upgrades comes at a critical for the company, and for the grid as a whole, as the country enters an El Nino summer that has already delivered record temperatures and demand levels in Western Australia, and is expected to do the same in the main grid.

Energy ministers last week expressed their concern that the country’s ageing coal generators are the weak link in the system because of their vulnerability to extreme heat.

“The biggest threat to reliability in our energy system is unexpected outages from coal‑fired power stations, as the coal‑fired power fleet ages,” federal energy minister Chris Bowen said on Friday.

“We need to get more energy on more quickly to improve the reliability of Australian’s energy grid, and that’s exactly what we’re all committed to doing.”

AGL says its billion-dollar upkeep program includes $27 million to be spent at its Torrens and Barker Inlet power stations in South Australia, includes minor planned outages on each of the units for maintenance to the cooling water systems, turbines, and boilers.

It is also spending $28 million at its Kiewa, Dartmouth and Eildon hydro power stations in Northeast Victoria for maintenance and capital upgrades and is spending $8 million pre-investment as part of the Clover Power Station upgrades this financial year.  The work also includes vegetation control to minimise bushfire risk

“As our thermal plants reach the end of their operational life and progressively close by 2035, it’s important we continue to maintain these assets to assist to provide system security as we also target 12 GW of new renewable and firming capacity by 2035,” AGL chief operating officer Markus Brokhof said.

“Our yearly maintenance program and regular investment in our thermal and renewable assets aims to increase the availability, reliability, and flexibility of our assets so they can respond to the peaks in customer demand throughout the year.

“This is a huge body of work that our asset teams prepare for every year. It involves meticulous planning and reviewing of the performance and potential issues across our diverse portfolio of assets so AGL can provide reliable power to the grid.”

AGL is also adding another 300MW of battery storage to the grid this summer, with the newly completed 250MW, one hour battery at Torrens Island, and the soon to be commission 50MW, one hour battery at Broken Hill.

AGL has also won a tender that will provide support to its proposed 500MW, two hour (1,000MWh) big battery at the site of the shuttered Liddell coal generator, with a final investment decision to be made in current weeks.