High Cost Drives Australian Utility to Shutter 2-GW Coal Plant
Australian electricity and natural gas giant AGL Energy announced plans last week to shut down the two-gigawatt Liddell coal-fired generating station in New South Wales and replace it with 1.6 GW of renewable energy, battery storage, demand response, and high-efficiency gas “peaker” plants.
“This plan demonstrates that old power plants can be replaced with a mixture of new, cleaner technology, while improving reliability and affordability,” said AGL Chair Graeme Hunt. “Decisions for the investments are staged to enable flexibility to respond to the changing needs of the market and improvements in technology over the next five years.”
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CleanTechnica’s Joshua S. Hill notes that Australia “is currently embroiled in a massive debate over the value of continuing its reliance on coal for its electricity generation or transitioning to renewable energy sources. Australia’s government has long been backed by coal interests, and as a result, change has been slow in coming.” But state governments are leading the country’s low-carbon transition, and Hill predicts the Liddell announcement “will one day be recorded as pushing the country toward its inevitable tipping point”.
A decisive factor for AGL was its own estimate that switching technologies would cost less over the long haul than extending the life of a coal-fired facility it originally acquired in 2014. “Total capital investment for the Liddell replacement option would be around AUD$1,360 million, compared to around $920 million for extending the life of the station,” CleanTechnica notes, “but the Levelized Cost of Energy between the two options is significantly different”: a portfolio of replacement options came in at $83 per megawatt-hour (8.3¢ per kilowatt-hour), while extending the coal plant’s operating life would have cost $106/MWh.
“The contrast between the two is even greater when you consider that the Liddell life extension project only extends the life of the station by five years, compared to a lifespan for the replacement portfolio of between 15 to 30 years,” Hill writes. “AGL did consider selling the Liddell Power Station, but determined that it would be more efficient to repurpose the site post-2022.”
The news of the Liddell shutdown comes just as carbon consultancy NDEVR Environmental calculates that Australia’s greenhouse gas emissions reached a new high over the last year, once “relatively unreliable” estimates of land use emissions are factored in, The Guardian reports.
“The ever-increasing emissions are taking Australia further from both its carbon reduction commitments made in Paris and the much bigger reductions demanded by the science-based targets, recommended by the government’s Climate Change Authority,” the paper notes. “That came despite massive jumps in wind-generated electricity in Victoria and New South Wales, which more than doubled, pushing down emissions from the National Electricity Market. But emissions from transport were at record levels, with jumps in the use of diesel and aviation fuel.”