EnergyAustralia looks to future of coal generator sites as results hit by low prices and customer losses

Energy Australia says it is looking at options for the transition of its Yallourn coal fired power generator as it reports a small profit for the latest half year, a result affected by intense retail competition, a loss in customer numbers and low wholesale electricity prices.

EnergyAustralia is due to close the ageing Yallourn brown coal generator in the Latrobe Valley in mid 2028 and says it is considering a range of options for the site, including battery storage, data centres and peaking gas plants.

“Planning for the future of the Yallourn site ahead of the power station’s mid-2028 retirement continues, including master planning for the proposed Yallourn Energy Security Precinct,” CEO Mark Collette said in a statement accompanying the half yearly results.

“The early-stage proposal is assessing opportunities for gas generation, large-scale battery storage and data centre development, using the site’s existing grid connections, gas infrastructure and skilled workforce to help support Victoria’s energy security after coal. Further planning, feasibility work and community consultation will follow.”

There has been concern in the energy industry that the Yallourn closure may be delayed, a fear amplified by the potential change of state government in this year’s election. But the company has made it clear behind closed doors that the facility is in no state to keep going beyond the current closure date because of its age and reliability issues.

EnergyAustralia, owned by Hong Kong-based CLP Power, announced an interim operating profit of just $40 million for the first half, an increase of 33,.5 per cent over the same period a year earlier, albeit from a small base, and $376 million on an Ebitda basis (pre tax, interest, depreciation etc) for $376 million.

The company reported customer accounts dropped by around 99,000, or 4.3 per cent, to 2.23 million in the 12 months ended June, causing it to invest heavily in an updated platform.

“Even as competition put pressure on customer numbers, our retail business delivered a stronger result and we kept investing in the projects that will underpin a more reliable, lower-carbon energy system,” said Collette. 

Wholesale prices, however, are expected to continue at least into the near future, as a result – says EnergyAustralia – of the rapid deployment of batteries and milder weather conditions.

EnergyAustralia’s own focus is on improving the flexibility of its own operations as it moves beyond the old “baseload” paradigm. It is investment in its Mt Piper coal plant in NSW to make it more flexible, hopes to build a major 1.45 GW Marulan gas plant and has a number of big battery projects contracted and under construction.

These include a 200 MW, 800 MWh contract with the now commissioned Orana battery, owned by Askaysha, and its two batteries now being built, the 50 MW, 245 MWh Hallett battery in South Australia and the 350 MW, 1400 MWh Woreen battery in Victoria. It is also planning a 250 MW, 1000 MWh battery at Mt Piper.

But, like the other big three energy generators (Origin and AGL), EnergyAustralia has invested little in new wind and solar, despite the impending retirement of their coal fired power generators.

It did announced that a small 84 MW offtake agreement with the first stage of the Golden Plains wind farm in Victoria commenced in the first quarter. From mid 2027, it will buy up to 345 MW from the second stage of what will be the biggest wind farm in Australia.

Those contracts were signed after Golden Plains began construction, and it is the lack of up front contracts from the big energy retailers that is cited as one of the major stumbling blocks for projects struggling to land finance and begin construction.

That was, however, no impediment to Golden Plains owner TagEnergy, which reasoned that if it did build the facility, then contracts would flow. Few other developers have been so bold.

Collette said low wholesale electricity prices are expected to persist through the remainder of the year, compressing generation margins. “On the retail side, lower average tariffs from July and second-half regulatory reforms are expected to add further pressure on margins,” he said.

EnergyAustralia is also looking to build a pumped hydro facility at Lake Lyell, near Mt Piper, along with EDF. It says it will soon provide a response to community feedback to the project when the Environmental Impact Statement was
opened for public exhibition in March and April.

State and federal planning decisions are expected by the end of the year.

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