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Five coal power stations to ‘run at loss’ by 2025

Five Coal Power Run at Loss

As many as five coal-fired power stations will run at a loss by 2025 and at least one faces early closure as the ageing generators struggle to compete against cheaper renewables surging into the national power grid, say researchers.

NSW’s largest coal-fired power plant, Origin Energy’s Eraring on the shore of Lake Macquarie, is headed for the biggest loss by 2025 followed by EnergyAustralia’s Mount Piper and Sunset Power’s Vales Point B, if electricity prices stay at 2020 levels for the next five years.

The Gladstone power station in Queensland part-owned by Rio Tinto, and Energy Australia’s Yallourn W in Victoria, will tip into loss-making territory if power prices dip even lower than 2015 levels.

At least one power station is likely to face closure several years sooner than planned, say the researchers from think tank the Institute for Energy Economics and Financial Analysis and Green Energy Markets.

It comes as the National Party pushes for the Commonwealth’s green bank – the Clean Energy Finance Corporation – to fund coal and gas power plants.

‘‘It is completely ludicrous to suggest that we should build a new coal power plant,’’ co-author and director of Green Energy Markets Tristan Edis said.

‘‘If we did build a brand new HELE (high-efficiency, low emissions) coal power plant it would no doubt run throughout the entire day and just push another older coal [plant] into the same position of Eraring.’’

Amid wholesale prices hitting sixyear lows and the flood of renewables, Origin has temporarily halted output at one unit of its huge baseload coal plant at Eraring on NSW’s Central Coast.

Brett Redman, chief executive of Origin’s rival, AGL Energy, last week said some black-coal power generators were struggling to cover their cash costs.

‘‘The market is facing a tidal wave of new supply, much greater than anything government authorities or market analysts forecast or even contemplated just two years ago,’’ Mr Edis said.

The report and industry comments echo Energy Security Board chairman Kerry Schott warning earlier this month coal power plants were ‘‘going broke’’ and some risked closing four or five years before the end of their rated life.

It is why the NSW government’s Electricity Infrastructure Roadmap provides ‘‘an essential and timely response’’, Mr Edis said, to ensure coal plant capacity is replaced before plants are shut down.

Former coal billionaire Nathan Tinkler, who believes coal-fired power could be more competitive if mines directly serviced coal-fired power stations, said: ‘‘One of the reasons coal-fired power is struggling to be competitive is because of a lack of the vertical integration we used to see between coal mines and power stations.’’

 

By: Elouise Fowler and Peter Ker

Image: Green Energy Markets

Source: Financial Review 24 Feb 2021

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