Massive $300m bill to keep Liddell online, but not reliable, for 3 more years

The ageing Liddell coal-fired power station, located in the Hunter Region, would require taxpayers to cover a maintenance bill running into the hundreds of millions of dollars just to remain operating for an extra three years, a leaked draft report has found.

As reported by Sky News Australia, a draft report produced by the Liddell Taskforce has found it would cost an additional $300 million to keep just two units of the Liddell Power Station in operation until 2026, extending their life by just three years.

The leaked findings are likely to be a further nail in the coffin of the 2,000MW Liddell Power Station, which is owned by AGL Energy and which has become increasingly unreliable as it approaches 50-years of operation. It also means it is now likely that it will cost more to keep the power station operating than can be recovered in operating profits.

The Liddell Taskforce was formed last year in response to AGL Energy’s announcement that it intends to decommission the Liddell Power Station in 2022. AGL subsequently delayed the decommissioning of three units by a year but remains committed to closing the plant, and replacing the generation capacity with new investments in wind, storage and gas generators.

The leaked findings appear to confirm AGL’s own assessment, which was that trying to keep Liddell online would cost huge amounts of money, send operating costs soaring, and would still not guarantee reliability.

A ready comparison is the $300 million plus invested by the WA Liberal government into repairing ageing units at the Muja coal generator in Collie. It didn’t work and the units were closed after a monumental waste of money.

According to the reports, the taskforce draft report concluded that the Liddell power station would continue to suffer deteriorating reliability, even with the $300 million expenditure, and its extension could put grid security at risk

The Liddell Taskforce also concluded that the funds would have to be provided by the taxpayer, suggesting that no private financiers could be found to prop-up the ageing Liddell Power Station. In particular, AGL Energy does not want to stump up the costs to extend the life of Liddell.

The maintenance costs may also exceed the book value of the power station.

The Coalition government has strongly opposed AGL’s plans to close the Liddell power station, which has served as one of the key motivations behind the ‘big stick’ energy policies pushed by the Turnbull and Morrison governments. This would grant the government powers to break up big energy companies, forcing them to sell off assets, if “uncompetitive behaviour” is observed.

In 2018, Alinta Energy made a $250 million offer to acquire the Liddell Power Station, an offer that was quickly rejected by AGL Energy. It is understood that AGL Energy was frustrated by the offer from Alinta, which was considered to be a substantially low-ball offer for the power station site, and one that distracted from AGL Energy’s efforts close the coal-fired power station.

When asked about the leaked findings during Question Time, federal energy minister Angus Taylor said that he would not comment on the findings of the draft report, and would wait until the final report was available before commenting on the future of Liddell Power Station.

A spokesperson for the minister told RenewEconomy as much when asked about the reports.

“The government is awaiting the final report of the Liddell Taskforce. We won’t pre-empt the outcome of the report,” the spokesperson said.

“Once we have received the report, the Government will consider the recommendations.”

Citing the $300 million figure, Greenpeace Australia called on the government to commit additional funds to support the transition to zero emissions energy sources, rather than prop-up the ageing coal power fleet.

“Coal is the biggest driver of climate change, and this past month has shown Australia is on the very frontline of climate impacts – heatwaves, bushfires, and destructive storms are all being turbocharged by the burning of coal and other fossil fuels.

“Instead of slugging taxpayers to keep an old and dangerous coal clunker alive, the Federal Government should accelerate the shift towards clean and renewable energy and protect Australians from the worsening impacts of climate change,” Greenpeace Australia campaigner Jonathan Moylan said.

The Liddell Taskforce includes representatives from the Federal and NSW governments, with the support of staff from the Department of Industry, Science, Energy and Resources.

The taskforce was expected to deliver its findings by the end of 2019, and its leaked findings come as the Morrison government commits $4 million of taxpayer funds for the completion of a feasibility study into a new coal-fired power station in Queensland.

AGL has been contacted for comment.