The early closure of the Yallourn coal-fired power station has forced authorities to declare a heightened threat of blackouts in Victoria and South Australia later this decade unless more on-demand power generators are built.
Following EnergyAustralia’s decision in March to bring forward the shutdown of Yallourn in Victoria’s Latrobe Valley to 2028, four years sooner than initially scheduled, updated modelling from the national power grid operator points to potential electricity supply shortfalls emerging between 2028 and 2030.
EnergyAustralia will close down its Yallourn brown coal-fired power plant in mid-2028.Credit:Joe Armao
The fresh supply-and-demand modelling weighed the implications of Yallourn’s exit against new power projects set to be connected to the grid, including French renewable energy developer Neon’s 300-megawatt, 450-megawatt-hour Victorian Big Battery project near Geelong. The Australian Energy Market Operator (AEMO) modelling warns there will be a breach of the market’s minimum reliability standards in the absence of a “further commitment of dispatchable capacity”.
“As highlighted by AEMO, further investment in dispatchable capacity will be needed to deliver reliable power to Australian families, businesses and industry,” Federal Energy Minister Angus Taylor said.
The Morrison government has repeatedly expressed concerns about the impact of coal-fired power plants closing early without enough “dispatchable” projects – assets capable of quickly cranking up and down, such as gas or batteries – to supply the grid at times when weather conditions for wind and solar farms are unfavourable.
The government insists an extra1000 megawatts of such capacity is required to fill the gap created by the closure of AGL’s Liddell coal-fired power plant in 2023, and has called on private power generators, as essential service providers, to step in with new investments before Yallourn shuts in 2028.
“It is imperative that the private sector step up to invest in new dispatchable capacity to replace Yallourn,” Mr Taylor said on Monday. “This is what is needed to keep the lights on and prices low.”
The market operator noted the long notice period until Yallourn’s 2028 closure provided “ample opportunity” for the market to prepare for a smooth transition without loss of reliability or excessive price impacts on consumers.
Alex Wonhas, AEMO’s chief system design officer, said the supply outlook would be improved by a number of projects, including EnergyAustralia’s 350-megawatt battery in Victoria and its 300-megawatt Tallawarra B gas plant in the Illawarra, which did not yet qualify as “committed” projects under the agency’s criteria, but were considered “very likely to proceed”.
“These new generation sources will help transition our electricity market as two out of three of today’s coal-fired generators are due to retire by 2040,” Dr Wonhas said.
The government agency’s new forecasts come at a time of significant upheaval for the energy market, as the transition away from fossil fuels towards cleaner sources of energy gathers pace.
Although coal still accounts for the majority of the country’s energy supply, an influx of renewable energy into the country’s main power grid in recent years is placing enormous pressure on coal generators by driving down daytime electricity prices to levels where they are unable to compete, threatening early closures.
Victorian Energy Minister Lily D’Ambrosio has repeatedly said she was confident the state had sufficient power to meet demand, and believed an influx of renewable energy into the grid by 2028 would keep prices down.
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