Lights out at 1GW Wallerawang coal-fired power station

The 1,000MW Wallerawang coal-fired power station near Lithgow has “switched” the lights out and ceased generation – the largest victim so far of the changing dynamics of Australia’s National Electricity Market.

The impending closure of Wallerawang – bought only recently from the NSW government by EnergyAustralia – was first signalled last year by RenewEconomy after the company informed market operator that it would be removing 1GW of capacity towards the end of March.

The intention was confirmed earlier this year, and on Monday the generation of electricity at the facility’s remaining unit was suspended. That unit, number eight, has been placed on a care and maintenance basis to return to service should demand increase.

Wallerawang is one of a number of coal-fired power stations that have been withdrawn permanently from service or mothballed. These include the Collinsville facility in Queensland, and two units from Tarong, along with the EnergyBrix facility in Victoria, Munmorah in NSW and the Playford B coal fired generator in South Australia. Its neighbouring Northern coal generator is operating only on a seasonal basis.

Gas fired generators are also being impacted by the decline in demand on the main grid, caused by reduced manufacturing output, greater energy efficiency, and the growing trend of households to provide some of their own electricity needs with solar panels.

All these factors are pushing down the cost of wholesale energy, making it difficult for older and less efficient generators to make money. Soaring gas prices are adding to the problems of the gas fired generators, and various plant are being re-purposed as peaking plant rather than base load, and EnergyAustralia has written down the value of its Yallourn coal fired generator and some gas generators.

Wallerawang, along with its larger and more modern neighbouring plant, the 1,400MW Mt Piper power station, was bought by EnergyAustralia for a combined figure of just $160 million in a deal announced in July.

The notice of withdrawal was posted on the AEMO website on September 10, just says after the completion of the purchase, and just three days after Tony Abbott, who has vowed to remove the carbon price that has plagued black coal generators, won the federal election.