NSW coal generation plunges 25% from 2008 peak

Coal production in Australia continues its revival post the carbon price, but in some areas the coal generation appears to be in terminal decline. In New South Wales, according to new data, coal generation is down one quarter from its peak in 2008.

Energy analyst Hugh Saddler, from Pitt&Sherry, describes the fall in coal generation as dramatic. Three plants have been closed – Munmorah, Wallerawang, and Redbank, even though the latter was only opened 13 years ago.

The decline in NSW coal generation has been accelerated by the removal of the carbon price, which has favoured brown coal generators in Victoria, and black coal generators in Queensland (where demand has been stronger than other states).

This graph shows the recent trend. NSW coal generation – now in private hands apart from the Vales Point generator – is 10 per cent below where it was at the start of the National Electricity Market in 1999. Its share of the NSW market has fallen from 88 per cent in 2009 to 76 per cent now.

Across the NEM, the share of coal has actually risen since the removal of the carbon price which has once again given Victoria’s brown coal generators a major cost advantage.

The impact of this has been to cause the annual share of coal fired generation across the NEM to reach 74.7 per cent in the year to January 2015. Total emissions in the year to January 2015 were 2.6 per cent higher than in the year to June 2014 – when the carbon price ended – and the emissions intensity of NEM electricity was 3.3 per cent higher.

The decline in NSW has coincided with the privatisation of the coal fired generators. Three of the five coal fired generators in NSW are owned by companies that also own large brown coal generators in Victoria.