The Victorian Andrews government is facing growing criticism for its refusal to disclose the details of a deal struck with energy giant EnergyAustralia around the closure of the Yallourn brown coal power station in the Latrobe Valley.
Last week, EnergyAustralia announced that it would close the Yallourn power station in 2028, four years earlier than previously planned. Some analysts, however, were surprised that the ageing and struggling generator would last that long, but EnergyAustralia revealed it had struck a deal with the Victorian government that included some level of financial support.
That has led to speculation that the Victorian government is effectively paying EnergyAustralia to keep the power station open longer than it would otherwise be. It is thought that this could include some form of price guarantee for the generator, which has led to complaints that the deal will further distort the energy market, preventing normal market dynamics from playing out.
Victorian energy minister Lily D’Ambrosio told parliament on Tuesday that the deal struck between the government and EnergyAustralia was about maintaining adequate supplies of power in the state and supporting workers impacted by Yallourn’s closure, suggesting that there is at least some component of the agreement that requires the power station to remain operational.
“Our agreement with them is about ensuring there is sufficient power supply in the system,” D’Ambrosio told the Victorian parliament.
“We will work with every single worker in the valley to ensure that they have a fair future, a future that they can look forward to, knowing that they have got plenty of time to actually plan their future, and we will be working with and walking alongside of them every step of the way.
“There is absolutely no incongruity between being tough and taking great ambition when it comes to climate change and taking people with us, and this is the only government that ever knows how to do that.”
However, when pressed by the Victorian Greens, D’Ambrosio refused to disclose any of the specific details of the deal struck with EnergyAustralia.
“We do not discuss matters that are commercial in confidence, and that should not come as a surprise to anybody,” Lily D’Ambrosio said.
“Our transition will ensure that people will have security, future employment opportunities and training as we decarbonise our energy system, as we are ambitious on climate change and are doing this whilst we give notice to the market to ensure that there is plenty of supply that will be built in time for that transition to occur and result in as smooth a transition as possible. That is the beginning, the middle and the end of it.”
Victorian Greens deputy leader Ellen Sandell described the agreement as a “dirty deal”, suggesting that the government had struck a deal to keep the Yallourn power station operating longer than is otherwise viable.
“It’s outrageous that the Victorian Labor Government has struck a dirty deal to pay to keep Australia’s dirtiest coal plant open for another seven years,” Sandell said.
“We are in a climate emergency, and the UN tells us we need to stop burning coal ASAP. Yet the Labor Government in Victoria is using taxpayer money to pay an overseas billionaire’s coal corporation, in a deal to keep coal plants open and allow them to keep polluting. It is beyond outrageous.”
“Why is this Labor Government paying an overseas coal billionaire to keep coal plants open in Victoria, rather than using that money to create new industries and jobs in the Latrobe Valley?” Sandell added.
EnergyAustralia has likewise disclosed scant detail of the agreement struck with the Victorian government, other than saying the company would commit $10 million towards a ‘support package’ for workers at the Yallourn power station and mine, to assist in finding new work and undertake new training in preparation of the plant’s closure.
Market analysts Green Energy Markets warned in a recent assessment of future coal plant closures that governments stepping in to prop up ageing coal power stations would only shift pressures onto other power stations that are not receiving government support.
“These physical and economic realities mean that efforts to keep inflexible coal plants afloat, let alone build new plants, are likely to be counter-productive in terms of both energy affordability and reliability as well as being contrary to both Federal and State Government’s commitments to address climate risk. Rather than seeking to delay or even deny the inevitable exit of coal, governments, as well as investors, need to be planning to replace them,” Green Energy Markets said.