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Renewables transition means planning for coal plant closures now

In Victoria, the oldest and most inefficient power station is now Yallourn. Operator EnergyAustralia has repeatedly stated it plans to keep Yallourn running until 2032, but three new signs point to this being a fantasy.

Yallourn Power Station in the Latrobe Valley.

Yallourn Power Station in the Latrobe Valley.Credit:Rebecca Hallas

First, new state government policies released last year will encourage massive growth in renewables. Sidestepping federal paralysis, states and territories have accepted the pressing need to modernise our electricity grid and are cranking up investment in the generation, storage and transmission of renewable energy. The NSW government’s electricity infrastructure roadmap plans to support a massive 12 gigawatts of wind and solar installed by 2030.

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Energy analysts ITK services have argued this NSW plan will actually increase pressure on Victoria’s coal power stations to close. More renewable energy means more supply, which lowers the average wholesale electricity price. Even more significantly, solar and wind can flood the market with essentially zero-cost energy during the day, increasingly pushing the wholesale price into negative territory.

Coal power stations designed to keep chugging along all day have to decide whether to ramp up and down – at the cost of wear and tear – or keep running while actually having to pay for the privilege. And of all electricity generators on the grid, Victoria’s brown coal power stations are the least able to cope with this ramping up and down. The analysts argue this will make Yallourn ‘unviable’ by 2025 and Victoria’s other power stations – Loy Yang A and B – will struggle by 2030.

The 2020 Victorian budget included a whopping $1.6 billion for clean energy and energy efficiency.

The 2020 Victorian budget included a whopping $1.6 billion for clean energy and energy efficiency.Credit:Gary McLean

That prediction was written in November last year, and since then conditions have become even less favourable for Victoria’s big old coal burners. The 2020 Victorian budget included a whopping $1.6 billion for clean energy and energy efficiency, funding that will reduce household energy demand and enable more wind and solar projects.

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The second sign that Yallourn won’t last the decade comes from the head of the Energy Security Board, who warned this month that “coal plants will retire faster than anybody thinks”. That was based on analysis that the current growth in renewables is on track with the market operator’s most ambitious ‘step change’ scenario, which foresees 94 percent renewables by 2040. This will lower the future energy price, and coal power stations will struggle to maintain commercial viability.

A third sign comes from the workers themselves, who have expressed scepticism the power station will stay open for another 11 years. In November 2019, unions representing 500 workers at Yallourn demanded conditions relating to closure be included in their enterprise bargaining agreement, saying they’d learned from the ‘ambush’ of Hazelwood power station. Workers reiterated these concerns to The Age last week.

Workers at Yallourn have expressed scepticism the power station will stay open for another 11 years.

Workers at Yallourn have expressed scepticism the power station will stay open for another 11 years.Credit:NIck Toscano

As this evidence stacks up, we have to ask what the power station owners hope to gain by giving unrealistic closure dates. Are they angling for a compensation payout when governments finally impose policies that directly curb pollution from coal power stations? The Victorian government is about to set emissions reduction targets for 2030, and EnergyAustralia could be looking to blame that policy for Yallourn’s looming closure even though the writing has been on the wall for years.

For their part, governments have perpetuated this silence over inevitable coal closures, happy to cheerlead the growth of renewables but less keen to acknowledge wind and solar will ultimately push out the older forms of electricity generation.

But this silence helps no one, and especially not the workers and communities in the Latrobe Valley who need as much notice as possible to plan for new industries and jobs in the region. One clear lesson from the successful transition out of coal in Germany is the importance of being upfront, so power stations can be phased out in an orderly way. Leaving it to the private market to decide leaves communities in the lurch.

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In the absence of credible federal policy on climate change, state governments have stepped up and supported the boom in renewables and energy storage, preparing the electricity grid for coal closures. Now it’s time for an open and honest conversation about retiring power stations and how government can support the Latrobe Valley through this difficult but necessary transition.

If we can’t expect the energy companies to be honest about when power stations will close, we can at least demand it from our political representatives.

Jono La Nauze is CEO of Environment Victoria

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