Victoria needs at least another 2 GW of committed capacity before next coal closure, says state energy chief

The chair of Victoria’s newly created State Energy Commission says the state needs at least another two gigawatts (2 GW) of committed capacity to ensure it has enough supply to cope with the planned closure of one of its last remaining coal fired power generators in 2028.

The SEC was created by the state Labor government to back up to 4.5 GW of new capacity by 2035 to help ensure the state can meet its legislated target of 95 per cent renewables by 2035.

It has already taken an equity stake in a four-hour battery near Melbourne and, earlier this year, bought out the Horsham solar project that had yet to be developed, despite winning a previous renewable tender, and added a big battery project.

However, SEC chair Simon Corbell, the former ACT energy and climate minister and one-time renewable energy advocate in Victoria, says more needs to be done, and quickly, before the planned closure of EnergyAustralia’s 1.4 gigawatt Yallourn brown coal generator in the Latrobe Valley in 2028.

“Looking at the Yallourn closure, for example, heading up to 2028 …. we’re probably, at least two gigawatts short in terms of committed projects, and potentially much more than that,” Corbell told the Clean Energy Investor Forum in Sydney on Thursday.

“So we will be looking at how we can invest to help close that gap. For us, wind is a particular priority, because we need some more onshore wind developed in the state, and we need some more storage. So we’re looking at what’s available and …(to) help bring some of those projects forward.”

The comments are interesting in the context of recent reports that the Yallourn owners, the state government and the Australian Energy Market Operator had discussed a possible extension of the coal generator should its closure pose a risk to grid security and reliability.

Those reports were angrily and emphatically denied by each of the cited parties, but Corbell’s comments underline the fact there remains some jeopardy in the process.

Much of that needed capacity could be addressed through the federal government’s Capacity Investment Scheme, which is seeking to underwrite 23 GW of new wind and solar across the country, and 9 GW/ 36 gigawatt-hours (GWh) of storage.

The latest tender, which is seeking at least 6 GW of new generation capacity, has at least 1.4 GW reserved for Victoria, with a 750 MW cap on the amount of solar and storage capacity. The tender is underway, with the winners to be announced before the end of the year.

The accompanying storage tender, which is seeking 4 GW and 16 GWh of storage, is also underway with final bids due in May and the winners announced in September. In all, the CIS is designed to support 5 GW of new generation capacity and at least 1.7 GW and 6.8 GWh of storage.