Brown coal’s bleak future as Victoria ramps up renewables

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The future for big brown coal generators looks bleak if Victoria meets its ambitious renewable energy target. It could force the closure of Hazelwood before 2020.

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The outlook for Australia’s four remaining big brown coal generators looks bleak following the Victorian Labor government’s decision to set a 40 per cent renewable energy target for 2025. At least one may be forced to close by 2020.

The influx of another 5,400MW of mostly wind and solar capacity is sure to significantly reduce the amount of brown coal generation needed. But the impact could be even more dramatic because of the inherent inflexibility of the ageing brown coal power stations.

These graphs from Dylan McConnell, from the Melbourne Energy Institute, illustrate the problem that brown coal will face.

The first is the current state of the market, and the generation patterns of this past week. Brown coal remains supreme, untroubled by the relatively small contributions from wind energy.

vic generation 2016

The second graph, however, tells a different story. It assumes that Victoria meets its 40 per cent target in 2025, takes a best guess at the mix of wind and solar that gets the state there, and then shows what would have happened if that capacity had been in the system in the past week.

vic generation 2025

As is clear, the supremacy of brown coal is severely challenge, and on windy days only around half the capacity is required, often much less.

McConnell writes in The Conversation this week that an increase in market share of renewables, from roughly 14 per cent today to 40 per cent in 2025, will necessarily come at the expense of market share for existing power stations. And in Victoria that means brown coal, Australia’s most carbon-intensive power source.

“The question now is can the brown coal generators collectively survive such a reduction in market share? And if they can’t, who drops out, and when? Or perhaps brown coal can be progressively phased out without too much pain.

Market analysts are pointing the figure at Hazelwood, the most polluting power station in Australia and quite possibly the world. Hazelwood owner Engie signalled last month that it was a possibility, given the company is partly owned by the government, which is taking a leading role in enacting the Paris climate agreement.

However, Macquarie analysts suggest that the generator could be closed by 2020. “To achieve a 25 per cent target (by 2020), simply Hazelwood needs to shut,” analyst Ian Myles wrote in a research note.

AGL, meanwhile, has said only that its principal brown coal asset, the Loy Yang A power station, could stay operating until its anticipated phase out in 2048.

McConell says that if brown coal generators are shut down, it will be good news for Australia’s national climate change mitigation commitments.

“At average Victorian emissions intensity, by the time the 2025 Victorian target is fulfilled, the new renewable generation in Victoria would be avoiding the emission of some 18 million tonnes of CO₂ per year,” he writes

McConnell also noted that exporting brown coal to other states is not likely to be a winner. Links to Tasmania and South Australia are limited by capacity, and while both states are looking to build new links, this is primarily to export more renewable energy rather than import coal. NSW, however, may remain a key market.

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8 Comments
  1. suthnsun 3 years ago

    The future for us all is less bleak if brown coal closes ASAP.

  2. Barri Mundee 3 years ago

    I welcome closure though one aspect not discussed is exported electricity via the SA inter-connector and Basslink with their possible role in propping up the brown coal generators, though (maybe answering my own question) that role will also be increasingly at the amrgins?

    • Barri Mundee 3 years ago

      That should be “margins”

    • Mike Dill 3 years ago

      I think that TAS woke up with the drought and BassLink issues. Getting more wind there looks to be happening currently, which will push electrons north much more often. SA is finding out that the big utilities have market power as generators, and will have a lot more solar and wind in the future.

      With the possibility of power coming in from other states, the future of coal ‘baseload’ plants in VIC looks bleak in the future.

  3. onesecond 3 years ago

    I guess it would help a lot if the French government followed through on their promise to close Hazelwood. Then totally irresponsible and immoral companies such as AGL would have less reason to cry and bitch and defend their profits over the future of the entire planet.

  4. Ian 3 years ago

    That last graph has big areas of brown, with periods when the brown dominates and at other times when it is almost non-existent. The current brown coal powered stations cannot do variability. According to the graph, Victoria’s target of 40 % renewables is not viable. They need to increase renewables to a much higher percentage. It’s far cheaper to have surplus wind generating capacity and have this shedding power at times of high wind availability in order to have sufficient power at times of poor wind availability, than to have coal stations generating power when it is not required.The solar component in that scenario is too pathetically low. It should be in the 3 or 4 GW range to fully cover the daytime peak load requirements.

    The only saving grace for Coal would be new markets, not NSW, or SA or Tasmania through interconnectors, but electrifying transportation. If coal wants to survive a little longer then it should heavily promote EV uptake.

    • Mike Dill 3 years ago

      I agree that there is a need for more solar. Based on the charts here, VIC could utilize about 2000MW. Having ‘extra’ wind and solar will cause over-generation occasionally. What I foresee is that there will be some storage to take up that over-generation, and that it will discharge to smooth out the coal demand and eliminate much of the gas peaking power plant demand.

    • Nassim7 3 years ago

      Short-term weather forecasts ensure that brown coal power stations mitigate the variability in wind power. These stations are backing up the undependable wind power. Obviously, they should be compensated for the periods when they are not producing power as they cost almost the same when in standby mode.

      If the politicians do not understand this, the stations will shut down and power supply for industry and homes will cease being dependable. Take your choice.

      In the UK, window power has a load factor of around 10% during many weeks of the year. That means that their rated capacity would have be 10 times larger to compensate low-wind days. On very windy days, the turbines must be stopped – to prevent damage to them.

      http://euanmearns.com/a-note-on-uk-renewable-load-factors/

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