Carbon price claims SA’s largest coal-fired generator

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.