Carbon price claims SA's largest coal-fired generator | RenewEconomy

Carbon price claims SA’s largest coal-fired generator

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Carbon and the merit order effect claim large victims in South Australia. The state’s largest coal-fired generator shut down in July and will only reopen for the summer peaks. But the argument still rages over what should follow – gas or solar thermal?

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The first coal-fired generator to shut down since the introduction of the carbon price has done so quietly, with the 544MW Northern power station near Port Augusta in South Australia closing down little more than a week after the introduction on July 1. The shut-down actually occurred a week later than planned because of relatively high wholesale electricity prices.

As the graph below illustrates, Northern was closed on around July 9. Its closure was well flagged by its owners, Alinta Energy, back in April, when they announced the power station would close from July and operate only for six months a year, in summer, when wholesale electricity prices are usually higher because of increased demand. It kept one of its 260MW steam turbines running for a week longer than planned because of high wholesale prices assisted by the closure of Yallourn in Victoria, when that power generator’s nearby river ran too deep into its coal mine.

And, as the graph also shows, the company’s other brown coal generator, the 250MW Playford power station, also in Port Augusta, has been shut since late February – ironically a victim of low wholesale power prices caused by reduced demand and the impact of renewables, which accounted for nearly one-third of South Australia’s generation in the first six months of the year. Together, the two power stations accounted for 30 per cent of the state’s electricity supply – and half of the state’s emissions – although Playford has not run at full capacity for years. This year, wind has overtaken coal in the amount of energy produced in the state.

Alinta plans to make the closure of Playford permanent because of the carbon price. The antiquated facility, built in 1963, is one of the most polluting in the country, and relies on brown coal from a diminishing resource at the Leigh Creek mine, several hundred kilometres away. Its fate will be sealed by the outcome of negotiations with the federal government in its contracts-for-closure program, a sort of cash-for-clunkers scheme that proposes to pay money to ensure the closure of 2,000MW of brown coal generators in Victoria and South Australia, and compensate their owners for their loss of asset value.

Even if a contract is not negotiated, it is hard to imagine Playford being reopened in any case for any length of time. As this graph below shows, the carbon price has shoved Playford to the right of the merit order, which means that cheaper and/or cleaner generators get preference in the local electricity market.

And this illustrates the privileged position that the two power stations held in the local merit order before the imposition of the carbon price.


There is, however, a raging battle over what should replace these facilities. The state government has expressed its preference for gas-fired generation, but the local mayor, green groups, and advocates such as Beyond Zero Emissions are pushing for a solar thermal power station – a facility they argue would create 1800 jobs, avoid over 100 million tonnes of carbon dioxide emissions and help address some health problems in the area. A recent poll found more than 4,000 local residents preferred the solar idea to the gas idea by a ratio of 100:1. Alinta has said it would look at solar thermal if the government provided the necessary financial support.

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  1. Barrie Harrop 8 years ago

    This power station is museum piece it was going to close in any event carbon pricing or no carbon pricing.

  2. Gillian 8 years ago

    Yes, let’s hope the ‘cash for clunkers’ price is just a token gesture.

  3. Chris Fraser 8 years ago

    “Alinta has said it would look at solar thermal if the government provided the necessary financial support”.

    Is that a proposed bribe ? Guys, just call a professional to acquire your solar thermal needs (like Acciona, maybe). They could do it cheaper than you.

  4. Colesy 8 years ago

    We should hold the Clean Energy Week Conference Gala Dinner on site there next year…

    • Barrie Harrop 8 years ago

      This would drive home the need for a renewable energy future,pity the community living in this region dealing with effects of air pollution and health impacts.
      These costs are going to become a major issue as they are dramatic side effects of dirty brown coal fired energy.
      Spoke with Minister Martin Ferguson last nightabout this very factor of on going health costs the hidden factor .

  5. Michael 8 years ago

    Everybody would love to go solar if some other taxpayers paid for it. I’m sure that a supplementary question of “Would you be happy to pay double for your power to have solar over gas?” would come back a lot less than 100:1. Government payments are just other Australian’s hard-earned tax dollars. Segments of the population need to realise that they need to pay for it out of their own pockets until it becomes economically viable….and if they are not prepared to then they have to accept the next viable option….which in this case is gas.

    • Mike G 8 years ago

      People might not be happy having their tax payer dollar spent on a more expensive power source (even if it is safer and more secure) but i think you will find most people would be happy having their tax payer dollar spent building emerging renewable technology infrastructure in order to bring it down the cost curve as quickly as possible so that it becomes cheaper than our current unsustainable sources of energy. You might even be forgiven for thinking that that is the act of a government acting with vision for the future health of our community and the sustainability of our energy sector.

      • Michael 8 years ago

        I’m sorry to inform you that China & US are the current manufacturers of this technology and no matter what we buy, they dictate the speed of innovation not us.

        • Tim 8 years ago

          As has been pointed out elsewhere on this site, it’s not just the equipment cost. Local “know-how” costs are also a factor. China & US (and Spain??) will not help out with that.

          • Jake 8 years ago

            Yep, Balance of System costs can account for half of the total cost to deploy renewable energy. This also means that there is a considerable space for local jobs that are unrelated to overseas manufacturing.

    • Ian Lett 8 years ago

      Who will pay for the gas pipeline if the replacement power station is gas powered? You guessed it- the tax payer. So if we are looking for a level playing field government should offer an equivalent amount to assist the solar thermal plant, and then decide which is a better investment.

    • glen 8 years ago

      The rarely mentioned advantage of solar and wind is price certainty. As capital expenditure is paid off, over time the price of the electricity produced falls. The supply and price of gas is variable and comes with significant price uncertainty. ( ie someone may decide to tax its externalities with a carbon tax ) When you are considering 25-30 year investment time-frames for new plant this price certainty becomes essential.

  6. Steve 8 years ago

    Unless i’ve misunderstood something, why would the govt be wasting limited contracts-for-closure money on a power station that will close down anyway?

    • Ben Courtice 8 years ago

      You could ask the same question of Hazelwood and/or Yallourn in Victoria. They should consider themselves lucky to get a single dollar.

  7. Vivien Langford 8 years ago

    Sorry to hear it’s a “battle” over repowering Port Augusta with gas v solar energy.
    The Port Augusta group and BZE are doing their darndest to get the first grid scale solar plant in Australia up there.

    If you want to see this happen, listen to podcasts of our two radio shows on Port Augusta 11/1/12 and 28/7/12

    It’s a campaigning matter so consider urgent letters to South Australian MPs to make this a reality.

    While you are on the BZE site, read the brilliant new BZE Report “From Laggard to leader” which explains why and how coal and gas will go out fast in this “Critical Decade”.

    Source URL:

  8. Concerned 8 years ago

    The proposed scheme as presented by BZE is interesting. However the devil is in the detail.
    The wind component is from 9 to 10 cents/kwh with present subsidies.
    The solar thermal is between 25 to 30 cents a kwh, on the projections of BZE. With most construction projects running over budget,that could be optimistic.
    Who will be willing to pay such rates, or do we subsidise as per BZE’s suggestion. They even suggest the whole of Australia contributes, not me.
    With wholesale rates far below such projected prices I do not think it has much chance.
    Most State Governments are basically broke.

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