Engie flags potential closure of Hazelwood, world's most polluting power plant | RenewEconomy

Engie flags potential closure of Hazelwood, world’s most polluting power plant

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Engie reveals for first time that it is considering closure of Hazelwood brown coal generator in Victoria, the world’s most polluting power plant.

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French energy giant Engie has flagged the potential closure of the Hazelwood brown coal generator in Victoria’s Latrobe Valley – widely recognised as the most polluting power plant in the world.

The potential closure was raised by Engie’s newly appointed chief executive Isabelle Kocher, who took the reigns of the energy giant earlier this month and is pushing a significant shift to renewable energy, smart grids and decentralised energy such as solar and storage in particular.

Earlier this month, Engie announced the purchase of an 80 per cent share in US battery storage company Green Charge Networks. Kocher has previously predicted that half of all electricity demand will come from local generation such as rooftop solar, as part of a shift away from centralised generators such as Hazelwood.

kocherOn Wednesday, Kocher (pictured right) told a French Senate committee that Engie planned a gradual withdrawal from coal-fired power generation in coming years, and that included the potential closure of Hazelwood.

“For the Hazelwood plant, we are studying all possible scenarios, including closure, or a sale if the state of Victoria tells us that it cannot meet power generating needs without this plant,” Kocher said, according to a Reuters report.

The closure of Hazelwood and all other coal-fired generators is supported by the French government, which owns a one-third share in Engie (formerly known as GDF Suez), which inherited Hazelwood through its purchase of International Power.

Environmental organisations immediately welcomed the news, noting that Victoria, and Australia in general, has a surplus of coal capacity, and calling on the government to help manage its closure.

“Victoria currently has an over-supplied electricity market,” Environment Victoria campaigner Nicholas Aberle noted in a statement.

“The Australian Energy Market Operator estimates we have 2000 MW more generating capacity than we need. Hazelwood is 1600 MW. The incumbent coal-burning power stations are blocking investment in renewable energy in Victoria.

“It’s time they started making way so that Victoria can benefit from the jobs and investment that will come with new renewable energy projects.”

The Hazelwood coalmine in February
The Hazelwood coalmine in February, 2014.

Hazelwood accounts for 5.4 per cent of Australia’s electricity supply, but has caused controversy both from its high emissions and an uncontrolled fire in its lignite mine near Morwell in 2014. A smaller fire also erupted earlier this week but was quickly put under control.

Reuters said Kocher told the Senate committee that Engie will also review its remaining coal plants one by one and close those with the most outdated technology. The company has already closed 1.6GW of capacity – the equivalent of Hazelwood – in Belgium and Britain.

Kocher also said an option could be to convert some of its remaining coal-fired plants to burning biomass, but this is not considered likely with Hazelwood.

A closure is preferable to all sides. Hazelwood, as the graph below shows, is the most polluting power station in Australia, and a closure will make room for more renewables, and also keep other power station owners happy, because it would remove some of the excess 7,000MW of baseload coal capacity and help underpin prices.

The question has been over the manner of closure, and the transition for the local community.

Most brown coal generators have been pushing for payments to help with remediation costs, estimated at around $200 million.

The government has baulked at this, although the likes of AGL Energy have shown interest in an ANU proposal to levy other generators to provide funds to help with the closure.

However, other plants, such as the Northern brown coal generator in South Australia, and dozens of plants in the US and China, have closed without payments, due to the fact they were making losses or were forced to close by regulation.

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Unions, NGOs, advisors, utilities and the state government are negotiating over a transition path for communities affected by the likely closures of Hazelwood and Yallourn and other major coal generators in coming years. The Latrobe Valley, along with the Hunter Valley, are both likely to be affected.

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  1. ben 4 years ago

    Bring it on, the quicker the better.

    • ben 4 years ago

      “forced to close by regulation” – wow, wouldn’t the outrage be funny

  2. Stuart Hilborn 4 years ago

    Get rid of this dinosaur!

  3. Ryan 4 years ago

    A lot of my friends work at Hazelwood 🙁

    • Stewart Rogers 4 years ago

      I feel your pain. I reckon the whole latrobe valley will be hit hard. Many people simply have no sympathy for the families involved. What we need is a slow phase out with the ability to reskill. I think the mass subsidising of renewables is dangerous.

      • Peter Campbell 4 years ago

        Hard for the individual workers but coal generation has been on notice for decades. They knew this day was coming.
        The site of an old power station is a good place for large-scale solar because all the grid connection infrastructure is already in place.

      • Ken Dyer 4 years ago

        Stewart, that is rubbish. Subsidies for renewable energy are being phased out all over the world. Why? That is the reality of the reducing costs of solar PV and wind power, and the ever increasing costs of fossil fuels. Do you really expect the Liberal Government to continue subsidising the coal industry forever? Because that is what they are doing!

        • Stewart Rogers 4 years ago

          Subsidies such as LGCs/STCs end in many years, ARENA still lives on and VEEC is still alive. The diesel fuel rebate is not a coal subsidy. A rebate is not a subsidy, as soon as people understand that, maybe taxes will go down.

          You’re right with one point, renewables will get cheaper fast and make coal uneconomical, we don’t need to speed that process up. It will happen with market forces.

          • Ken Dyer 4 years ago

            Stewart, read this link.
            At least the renewable subsidies again paid for by the taxpayer actually put the benefit back into taxpayers pockets.
            Why isn’t the Coalition Government campaigning down in the Latrobe Valley? I think you know the answer to that question.

          • Stewart Rogers 4 years ago

            Majority of it is the fuel tax rebate. Coal miners shouldn’t have to pay an excise tax on fuel as they use their own private roads on their own property. I don’t have a problem with that as farmers and other companies conducting business on their own land get that. If tractors were required on a CSP farm they’d get that too.

            “It’s in the budget every year. The fuel tax credit scheme is a majority of that money, but it’s usually over $5 billion every year that we use to subsidise fuel of large corporations,” he said.

    • Ken Dyer 4 years ago

      Ryan, I sympathize with their plight. But tell me this, why isn’t Turnbull with Jobson Groth and Greg Hunt with Derek Taction beating the drum down there in the Latrobe Valley? Solar PV and the renewables industry in general are the biggest employers in the world right now and growing.
      Do we see Turnbull and Hunt or even Shorten down there promising to fire up the renewables energy industry so Jobson Groth can find a home instead of camping on the Adani mine site, that will now never become a coal hole in the ground?
      No we don’t. The fossil fuel workers of the Latrobe Valley have been abandoned to their fate by this Government. Apparently, It is more useful to subsidise Puffing Billy, another coal burner, than the Latrobe Valley workers.

    • Ian 4 years ago

      There are apparently 500 full time staff and 300 contractors working a Hazelwood. Surely they can be redeployed elsewhere. We’re not talking huge numbers of people here. How many can be retrained as solar installers ? After all Ford and Alcoa closed down in Geelong with hardly a mention in the papers about their workers’ plights.

      ‘Subsidising renewables is dangerous’ Stewart says. I would tend to agree with him when the subsidy is directed at large companies installing large scale solar or idiotic ideas like carbon capture and storage. Subsidies should be directed at distributed solar and storage and at large scale wind , dispatchable once through hydro , edge of grid and rural minigrids, grid interconnectors like Basslink and at electrifying transport in the form of metro-type systems( light rail, electric trams,busses, high speed rail etc) and in the form of dual purpose EV ( distributed battery storage on Wheels). Don’t say there is not enough money for all this consider the Pacific highway upgrade that costs about $100 million/Km!

      Plus there was $2billion in the budget to buy bombs to drop on Syria, maybe not a subsidy, more like paying tribute to Pax Americana.

  4. Tommy Griffiths 4 years ago

    HI Giles, Another footnote for your article that the your readers may be interested in. Currently there are two prosecutions against Engie currently in court over the Hazelwood mine fire pollution case. This risk and costs associated with these cases are another huge incentive for them to shut down Hazelwood.

  5. Steve Phillips 4 years ago

    Great news!

  6. Dave F 4 years ago

    Hazelwood appears to be the only Latrobe Valley coal-fired station with registered with the CER for biomass co-firing (think: East Gippsland woodchips). They’ve been doing trials since 2005, so it’s good to hear that this is “unlikely”. Giles, what’s your source?

    Separately, it will be interesting to see how they plan to deal with the enormous cost of remediation.

  7. Ian 4 years ago

    I hope South Australia wasn’t counting on some of this excess Victorian power from Hazelwood.

    • Stewart Rogers 4 years ago

      There is still plenty of excess power in Victoria. Once Tas gets connected again then that may change. SA will have a lot of batteries soon to flatten peak usage.

  8. Alan S 4 years ago

    ‘Most brown coal generators have been pushing for payments to help with remediation costs, estimated at around $200 million’. Wouldn’t this mean that coal fired power generation is then subsidised by the taxpayer?
    Surely only renewables are subsidised – or that’s what the pro coal mob tell us.

    • Stewart Rogers 4 years ago

      As soon as all subsidies (including green subsides) are ended the better. The natural outlook for coal is negative.

      • david_fta 4 years ago

        Let’s face it, Stewart, these companies have all bought into coal-fired power within the last three decades – 3 decades ago we knew about climate change.

        They don’t deserve “compensation” for shutting down their purchases – but they are welcome to sue whichever “consultant” did their due diligence.

        • Stewart Rogers 4 years ago

          I’m not saying they should receive compensation. Quite the opposite. I’m saying neither coal nor renewables should be subsidised. The great thing about the NEM is the fact that market forces control the energy mix. With the R&D going on in the field it is likely that renewables will be the bulk of the NEM by 2050.

          • david_fta 4 years ago

            I’m agreeing with you about no “compensation”. Regarding the NEM, by 2050 there will be no fossil fuel burnt anywhere in Australia. Climatic constraints demand this, climate science has known it for at least 20 years, and we already have nearly all the requisite technology.

            If you want to see a “level playing field” policy approach that guides and informs the necessary technological transformation (as well as more detail on why it’s necessary), go to http://www.dpmc.gov.au/taskforces/unfccc/public-submissions/arthur-david and download File attachment: “Att to 294 David Arthur.doc” from the link at the bottom of the page.

          • Stewart Rogers 4 years ago

            In just a couple of years we will see the likes of Adani and many others investing in huge renewable plants. It’s just a matter of a couple of years. A lot of residential homes will be set up with the likes of batteries + reposit power type systems. In a proper free market old coal companies will fail very soon.

            I think we will both disagree on how policy should play a role in the transition. Frankly I don’t think policy is necessary, the transition will happen regardless and quite soon.

          • david_fta 4 years ago

            Take a look at the policy; all I’m proposing is a Consumption Tax at escalating rate, year by year, until fossil fuel use is eliminated from the economy.

            It’ll turn Australia into an innovation leader instead of a laggard, and it involves no additional regulation. In fact, it also provides for a lump of additional revenue for a decade or so while Australia undertakes the tax reform that governments have squibbed since the Henry Review.

            Best of all, it hits all fossil fuel use impartially – which means for the first time ever it becomes expensive to burn a great swadge of oli to import stuff to Australia. We’re not just talking food-miles here, we’re talking all the miles of everything that is imported from the other side of the world that used to be made in Australia.

          • Stewart Rogers 4 years ago

            That fundamentally violates the argument of a free market. When the South Australian wind farms are pushing the NEM spot price into negatives coal plans like Hazelwood will realise it’s simply not profitable. Then investment will increase for wind/solar.

          • david_fta 4 years ago

            “That fundamentally violates the argument of a free market. ”

            With due respect, Mr Rogers, that’s stuff and nonsense.

            A Consumption Tax on Fossil Carbon is a form of Pigovian Tax, which is simply where the cost to the general good of a particular activity is recovered. I have little doubt, for example, that as a responsible citizen Senator Leyonhjelm would happily pay a tobacco excise on his stogie to the extent that his consumption thereof imposes a cost to the public purse for health care, be it of himself or anyone else.

            Now, it so happens with fossil fuel consumption that the “costs” to the general good fo further consumption are so high as to be immeasurable (“the end of the world as we know it”, and so on)- so the appropriate rate of Pigovian consumption tax (look it up in Wikipedia) would be infinitely high.

            So we set a finite rate, and in order to transform the economy away from Fossil Fuel use without unduly disrupting that economy, we set the initial rate sufficiently low, then increase it year by year (with appropriate cuts to other taxes) until the requisite decrease in fossil fuel consumption (ie 100%) results. “Normal” taxation is then resumed.

            I daresay the Liberal Democrats might have a view on what rates of such normal taxation might be.

        • Alastair Leith 4 years ago

          Even the head of Origin Energy has said as much, although he limits the period of “market awareness” to just ten years… kind of pathetic.

          • david_fta 4 years ago

            Better start suing those due diligence consultants lest they evade accountability by shuffling off this coil. 🙂

      • Ken Fabian 4 years ago

        The costs of climate consequences may not be readily quantifiable but as long as they do not appear on any energy producer’s books they are being subsidised. I suppose they do pass on much of that ‘saving’ to energy consumers but those costs ultimately must be paid; the climate system will not be fooled by pretending those consequences can’t come to pass.

        Stewart, I think there must be a place for deliberate policy that elevates least emissions above a deeply distorted ‘least cost’ market choice that pretends away the externalised climate, health and other costs.

  9. Robert Comerford 4 years ago

    Just shut it down and provide renewable jobs in the area for the redundant coal workers. There would be plenty of work just demolishing and cleaning up the site to start with. The wires are already in place so how about a solar thermal farm on the site?

    • Brunel 4 years ago

      Solar thermal is not worth it there.

      Maybe South AUS.

    • david_fta 4 years ago

      How about jobs in respiratory health care?

    • Barri Mundee 4 years ago

      Wind may be better. I live in the area and there seems to be considerable wind resources. There is now discussion in the local media about transitioning to “something else” but that’s about it. I believe there is a chance of a sudden exit by Engie and whilst that will be environmentally positive I fear for the impact on employment in a community that has paid a heavy price for privatisation.

      • phred01 4 years ago

        we should put a wind farm @ parliament there’s plenty of hot air blowing out of the chambers

      • Robert Comerford 4 years ago

        I’m not familiar with the area, so obviously put in the technology that best fits the area. It is important to show that those families dependant on the local fossil fuel industry are given new opportunities. They are paying the price for the rest of us having clean air.

  10. onesecond 4 years ago

    It’s mindblowing that Australia hasn’t already achieved 100% renewable electricity. There is wind and sun all over the place and it would be cheaper all things considered. It would only take a couple of years, don’t let anyone tell you otherwise.

    • Dispassionate 4 years ago

      yep it could be done but the cost would be huge!

      • onesecond 4 years ago

        The cost would be less than proceeding the way you have done with coal. Renewable micro-grids don’t need your multi-billion wiring strapped all over the continent for example.

  11. MrCyberdude 4 years ago

    Everyone has an opinion.. The FACTS are;
    Hazelwood is a low-cost generator of electricity, has an operating licence until 2034 and is a reliable contributor to the NEM, where it supplies between 20 and 25 per cent of Victoria’s energy requirements and 5.4 per cent of Australia’s energy demand.

    There will be a price increase and a reliability decrease (Power outages).
    Brown coal power generators like Hazelwood, Yallourn and Loy Yang A & B Power Station’s and Mine’s are propping up South Australia’s and Tasmania’s inconsistent Wind and Hydro Generation.

    “A closure is preferable to all sides.” WRONG!, The workers do not think so and as usual they are left out of the commentary, unlike Toyota, Holden and Ford workers. The Gippsland community does not think so and they remember what happened in the 1990’s regarding business and shop closures as well as real estate prices being smashed along with increased unemployment.


    There are no alternate jobs or plans for any! Close to nil government involvement, ask all parties.

    Every consumer and business will pay more for electricity usage or supply charges when the price goes up, especially when the next generation of Nuclear power plants comes on line to replace coal plants. Maybe they will call it a budget emergency tax?
    Only a few ignorant greens want it closed at all costs, as they are bloody minded.
    If solar was genuinely competitive then there would be no need for any subsidy’s.

    How do I form these opinions, insider informed knowledge, 25+ years in the industry, 40 x 250 Watt’s of solar panels on my roof, lifetime in the Latrobe Valley and an Australian Electoral Commission (AEC) elected CFMEU member representative.

    • Ian 4 years ago

      Your 10KW of solar panels is competing directly with the previously lucrative peak demand period in the middle of the day. You are directly contributing to the demise of your beloved brown coal . It’s people like you who have created the crazy duck neck curve, reducing the reliability and viability of your coal supplied network. The renewables transition die is cast, the Rubicon crossed and , mate you have contributed to that. Tough brown coal old pal, you might as well embrace the whole renewables transformation, it’s better for the climate by the way.

    • Chris Fraser 4 years ago

      I’m genuinely impressed by those 40 panels. I think back to my own reasons for buying PV. It came at an overall cost, but I preferred to think of it as investment. At the risk of reducing centralised energy demand and possibly the large generators’ propensity to employ … i decided to side with fewer emissions.When considered thoughtfully, the disruptive technology is only indicative of changes in the current energy generation. We still need solutions of which wind and solar are only a part, and we still need skilled people to provide them. The only thing that’s different is we pollute less.I hope that employee organisations such as yours are prominent in getting bad employers to recognise the people’s skill base, the needs of community, and facilitate skills training for probably all the existing employees in the energy economy.

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