Hazelwood brown coal generator may close in next few months

Hazelwood, the brown coal generator ranked as one of the dirtiest large-scale power generators in the world, could be closed within a matter of months following a decision by the board of the majority French owner, Engie, last week.

The French business newspaper Les Echos on Sunday said its sources reported that the board of Engie decided to close the near 50-year-old 1.55GW brown coal generator in the Latrobe Valley at a meeting held last week.

Officially, the company is saying that no decision has been made, but that is only because it needs to allow its minority partner, Mitsui, to get the OK from its shareholders. This is considered a formality given that Engie owns 72 per cent of the generator.

According to Les Echos, the date for closure has been at April 1 next year, but could happen earlier.

Hazelwood has been the source of embarrassment for Engie, nearly from the time it inherited the asset through its purchase of International Power in 2010.

Engie is one-third owned by the French government which has been seeking to lead the world by example on its climate targets, and Engie has promised to exit its coal assets. Already, 5.9GW of its 11.9GW of coal capacity has been shuttered or sold, and the closure of Engie will take that total to 7.4GW.

Engie is also a major sponsor of the “terawatt” initiative to install more solar across the world, and predicts that half of all electricity will be sourced from local generation, such as rooftop solar and storage.

According to Les Echos, the closure costs will far exceed any estimate circulating in Australia, which have put it at around $200 million or as much as $400 million. The French newspaper, citing sources, put the cost at more than €1 billion ($A1.43 billion).

Community group Voices of the Valley has called for the a “just transition plan” for the region as it moves beyond coal, and want the government to put one into place as a matter of urgency.

“The Latrobe Valley community, and Hazelwood workers in particular, are being held in suspended animation as we wait for Engie to announce its plans for Hazelwood,” said spokesperson Wendy Farmer.

“We just want to know what is happening and when, so that we can plan for our long-term future. If the Andrew’s government is serious about its commitment to the Latrobe Valley, it should be playing a far greater role in getting answers from Engie about its plans for Hazelwood.

“The impact that the closure of Hazelwood will have on our community is enormous. We know that Hazelwood will close eventually, and regardless of a fixed date, both State and federal governments should be doing everything they can to prevent the closure of Hazelwood from having a negative impact on our community.”

Analysts say that the closure of Hazelwood will likely push up wholesale electricity prices because it will remove excess capacity and mean that other coal-fired generator, such as Yallourn, Loy Yang A and Loy Yang B can command higher prices.

Some analysts estimate that the price could rise 10 per cent in the short term, although the impact of Victoria’s renewable energy target, which aims for 40 per cent renewable energy by 2025, will likely dampen prices over the medium to long term.