It is positive for our electricity grid and power prices that a group of Govt MP’s has spoken the unspeakable and suggested building a new coal fired power station.
However that seems premature right now.
Closing Hazelwood has more than doubled the Vic AEMO wholesale price and has made Vic prices now the most expensive of the three big coal burning States. Comparing Jul-Dec2016 prices to Apr2017-Mar2018.
The elephant in the room right now is securing the normal operation and maintenance of Liddell past 2022.
The owners of Liddell are AGL who have only a nominal valuation on Liddell and clearly can not be relied upon to maintain it properly. The Govt could buy Liddell but it is a lame duck and if they needed to pass anything through the senate probably could not do that. Alinta and Delta are expressing interest in buying Liddell but AGL is saying it wants Liddell.
Around that issue the lies and misinformation need to be waded through and sorted.
One issue is I think there is zero chance AGL could replace the 1800MW of Liddell by 2022.
Something needs to be put in place soon to get Liddell off AGL because we will have a new Labor Govt by the end of 2019 the way polls are heading. Labor will not stop AGL shutting Liddell and the nation will be further harmed as prices will be pushed higher as they were when Hazelwood closed.
We were lucky last summer heat waves were moderate, few and usually on weekends so resulting price spikes were not severe. As we leave summer heat price spikes behind the Govt has the best chance to keep talking up gas supplies and talking down electricity prices but they seem so confused – for example thinking that massive spending on Snowy 2.0 will somehow lower prices.
Not only, but also-
The stupid bastards have scotched Victorian gas exploration which pretty much excludes the second option [ but perhaps that ENRON style play will be the AGL ploy / sarc.]
Even Dan the Man would have all sorts of fun with his CFMEU mates if Vic had to build a new power plant of any style in a hurry.
I don’t know the terms of the NSW Government sale of Liddell but it could be there is a clause in the contract of sale which provides for compulsory (re)acquisition in the event of willful misuse of the asset to the detriment of the people of NSW?
Should it be built Snowy 2.0 is/will be a monument to Turnbull’s vanity. The project was a crock back in the eighties when first costed and bear in mind those were times when there was plenty of genuinely cheap spare overnight coal generated power for pumping, essential for pumped storage schemes. That’s definitely not the case now.
Here are some comments about our current electricity nightmare I put on Andrew Bolt’s blog today:
AGL getting out of coal.. yeah right.
In addition to the Liddell power station in NSW AGL owns two other coal stations Bayswater 2640MW black coal in NSW and Loy Yang A 2210MW brown coal in Victoria. AGL is refurbishing Bayswater which will result in an increase in output to 2740MW. So AGL will still be left with almost 5000MW of coal generation after closing down Liddell, hardly “getting out of coal”.
Just as the closure of Northern PS in SA and Hazelwood PS in Victoria caused a massive jump in the wholesale price of electricity, so will closure of 2000MW Liddell PS send prices further skyward. But it’s a win win for AGL, firstly they don’t need to spend capital to refurbish Liddell and secondly they will undoubtedly make a killing, dwarfing what they lose through the closure of Liddell. The fact that it will push power prices even higher is not the worry of CEO Mr Vesey, the AGL virtue signalling ads belie what is simply a play to game Australia’s broken electricity market.
If Australia’s NEM had not been so egregiously trashed by federal and state government renewables subsidies legislation e.g. RET etc. with guaranteed, mandated renewables grid access then normal market forces would step in to fill the generation shortfall. As it is no right minded private venture capitalist or bank would dare risk the kind of money involved in a market that’s become a contentious political football where capricious, irrational market interference by government has become the norm.
On top of all that we have the NSW gas bans – the proposed pipeline to bring Santos Narrabri gas to market is snarled in lawfare and lock-the-gaters for over a year – the Feds are trying to get gas exploration going offshore NSW which they do control and NSW Govt is whining about the effect of seismic on fish.
The Monash group represents the only realistic way of reducing electricity prices and making supply more reliable. That means all those in favour renewables or who benefit from higher electricity prices are going flat out to scotch the plan.
I doubt that anyone in Canberra cares about reducing prices because their wages are so much higher than the rest of Australia that they can afford them, and because they have contracted supply at a lower fixed price than prevails in SA and Vic. So the politicians will stroll along doing nothing until there is one or two major blackouts.
Should that happen before the next federal election they may get a nasty surprise, as the votes for both Liberals and Labor will slump. I hope the loss of seats is enough to stall the Shorten disaster.