Australian coal plants obsolete, uneconomic in low-carbon race

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Report by ex-Origin Energy executive calls for urgent reform of Australian electricity network, to replace ‘old, inefficient, costly’ coal-fired generation.

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Australia’s fossil fuel-driven electricity network is outdated, inefficient and in need of urgent reform if it hopes to compete – economically and technologically – as the world moves to limit carbon emissions, a new report has found.

The report, released on Tuesday by the Climate Council – the crowd-funded independent advisory body formed after the abolition of the Climate Commission – warns that Australia’s ageing fleet of coal-fired power generators are obsolete in the race to curb carbon emissions, and would soon be rendered obsolete economically, undercut by cheaper and cleaner generation from wind energy and solar plants.

The report’s recommended low-carbon energy transition – not unlike that of its author, Andrew Stock, who has graduated from being an executive at Origin Energy to his roles in the Climate Council and as an executive at Silex Solar – is widely considered necessary to meet Australia’s national and global carbon budgets; the outer limit we can safely emit to avoid catastrophic climate change, which at current rates is on track to be exhausted in the 2030s.

But with the bulk of Australia’s coal power fleet pushing 30-plus years of age (significantly older than the globalaverage, with 90 per cent of the technology obsolete), the report argues that it must happen sooner, rather than later, with banks unlikely to finance coal plant replacement or retrofit with as yet untested and uncosted Carbon Capture and Storage (CCS) technologies, in light of the attached carbon risk.

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“In little more than a decade, Australia will have a fleet of old, inefficient, costly coal fuelled power stations unsuited physically and commercially to retrofit with CCS. Given the long planning horizons for the electricity industry, Australia needs to address these crucial dilemmas before 2020,” the report says.

According to the report, Australia’s electricity sector currently accounts for 33 per cent of the nation’s greenhouse gas emissions (its single biggest source) and ranks it among the world’s top 10 biggest per capita emitters from electricity and heat: two to three times above Germany, Japan and China, and around 30-50 per cent higher than the US, Russia and South Korea.

Screen Shot 2014-06-17 at 11.52.12 AM“Urgent action is required to prepare Australia’s electricity sector for the near future,” says the report, noting that it takes over a decade to plan, design, finance, and build major new power infrastructure.

But even without the pressure of global and national carbon budgets, the report warns that coal-fired power will struggle to compete economically with renewable electricity sources, like wind and solar which, internationally, were already generally lower than the cost of coal plants with CCS.

“The least expensive zero emission option available at scale for deployment today in Australia is wind, closely followed by field scale solar PV,” says the report. “These costs are falling fast as take-up globally accelerates. Wind should be 20–30 per cent cheaper by 2020, solar PV is expected to halve in cost.”

As for gas, the report says increasing prices mean that electricity generated from wind is already competitive with new gas plants, even without CCS, and lower cost than gas with CCS.

But the report also warns that Australia is not keeping up with international investment and uptake of renewable electricity – lagging behind, in particular, in the global solar race – and will need to adapt its market and regulatory structures “to cope with the global shifts underway and accelerating growth in distributed low/zero emissions energy generation and storage.”

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13 Comments
  1. michael 5 years ago

    extremely interesting moral conversation. from that table we should be more worried about india catching up with china per capita than about australia dropping from first place, pretty sure the atmosphere doesn’t count the molecules different dependent on source. but is that fair? probably/potentially not.

    • Henry WA 5 years ago

      So you really think that it may be ok to pollute carbon at 3 times per head of population compared to China when we have both the climate and the land space ideally suited to both wind and solar and the financial means to easily progress to renewables. What sort of message does that send to either India or China?

    • John McKeon 5 years ago

      Why should I pay any tax? The Australian Tax Office wouldn’t miss it, there was never very much to collect anyway. But sshhh! Don’t spread this around. Other people might get the same idea and then not want to pay any tax like I don’t. Then that would make a bad difference! After all somebody – most bodies – have got to do it to maintain our civilisation.

      But it is alright if I don’t and you don’t tell anyone. If it’s just me it will be alright. So don’t say anything, michael. Promise?

      • michael 5 years ago

        Interesting analogy, to use the tax system, in which we are taxed on our personal revenue instead of per head, should carbon allowance be per GDP? With the global nature of commerce and hence carbon sources being so global, the question of who is ultimately responsible for the carbon bill is not as simple as a per head equation. But nice attempt at simplification anyway.
        Is it country of consumption of the goods with the embedded carbon who is liable? The country of manufacture? Broken down to each country with a piece of the value chain? Or the country at the source of the carbon base product gone into producing the energy or goods which the energy produced?

  2. Chris Fraser 5 years ago

    There would be few statements and prognosises that we could better rely on, given that Mr Stock has now been relieved of his understandable loyalties to Origin. An objective voice and an insider as well. The point that the coal fired generators are being allowed to grow old is well made and should make us glad, even though they become more expensive to maintain. If there was ever a case where the ducks were lining up in preparation for clean energy investment, Australia would be it. It just appears to me that the pragmatic solution to ageing generators is not well embedded in the minds of those industry leaders who should know better, and even now talk their protectionist gibberish. The industry leaders could also be assured that many readers would gladly assist in the process, however as the article goes, those 10 year plans need to be made now.

  3. Les Johnston 5 years ago

    Timely reminder that there has been no new coal fired generators developed in decades. This means retrofit and refurbishment costs must be included in keeping these operating. It also brings into focus that the cheaper option (if anyone is interested) is to pump taxpayer funds into solar and cut the losses by closing down ageing fossil plants because refurbishment and upgrading these plants to best available technology is way more expensive. The missing ingredient in this discussion is unbiased objective cost data. When will fossil plant owner/operators be prepared to remove personal interests and place the public interest first?

    • michael 5 years ago

      you’re suggesting refurbishing existing plants that have been fully paid for would be cheaper than building the equivalent generating capacity (MWh not MW nameplate) with solar and batteries from scratch in pure dollar terms? Exactly which NPC timeframe are you using to come up with that? I’d be very interested in how much you would think a solar system capable of providing say, 8,500GWh per annum would cost (somewhere near Loy Yang B output).

      • coomadoug 5 years ago

        The NSW government today announced they will sell the failing business of poles and wires to the people who already own them. The super funds will buy the poles and wires off the people using the people’s money. Now can someone explain this to me in simple terms?
        Dont forget the point, that the thing the people will be buying off themselves is doomed to decades of shrinking activity.

      • Les Johnston 5 years ago

        I was not intending to make any inference re refurbishment costs of existing plants. There does come a time when the typical 1970’s power station has to face the end of its economic life unless the owner can find a new source of cheap funds. Pressure is applied to regulators to lower standards for existing use stations. Hence the old plants get to see another ten years of life. Nevertheless there is a crossover point which needs to be determined on a real costs basis not on the basis of vested interests.

        • michael 5 years ago

          Ah ok, read a little differently. Definitely when they come to the end of their life it’s game on for head to head value propositions between coal and solar/wind

  4. coomadoug 5 years ago

    One thing worries me a lot. This is a dreadfully pessemistic thought, but does have some merrit..sorry.
    Governments seem to come up with interesting ways of transferring money from one place to another. They have friends who want money and they have a pile of money. I refer here to fossil fuel industry influences as the friends and super annuation as the money.
    Ohhh suddenly and idea. Lets sell the poles and wires to the super funds and use the money to give out some handsome golden parrachutes to the coal generators and miners. Unfortunately the super funds will cop all the pain. We will actually be selling things to the pensioners that they already own. Things that will go broke, but if we do it quick, they wont see it coming.

  5. disqus_Iu23n4qsTn 5 years ago

    Big businesses (including power companies and coal mines) put a lot of money into the Liberal party. How can we get the Liberal party to shun the people that keep them afloat in favour of what is best for us and the Country?

  6. Paul Malcolm 5 years ago

    Oh, Australia should be exerting an extra effort to address this concern.

    “Urgent action is required to prepare Australia’s electricity sector for the near future,” says the report, noting that it takes over a decade to plan, design, finance, and build major new power infrastructure.”

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