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NSW facing power uncertainty

NSW faces “huge challenges” dealing with the exit of AGL Energy’s Liddell coal station in 2022 and remains open to new coal plants and more gas facilities in the next decade to balance the transition to renewable energy.

With coal providing 80 per cent of NSW’s electricity supply and the state importing 95 per cent of its gas needs, state Energy Minister Matt Kean said the government must be realistic about moving to renewables and keep every supply source in the mix ahead of Liddell’s closure.

“We know we have some huge challenges in the energy space in NSW,” Mr Kean said yesterday.

“We have the Liddell power station closing in 2022 and we need to make sure we meet the shortfall in capacity.”

Wholesale power prices have surged by more than 40 per cent in the national electricity market in the past year, partly driven by the closure of the Hazelwood coal plant in Victoria two years ago.

The pending closure of Liddell and loss of its 1800 megawatt supply meant the state needed to be pragmatic about a move to renewables. The state is open to a high-efficiency, low-emissions coal plant and gas supplies, including EnergyAustralia’s planned Tallawarra B plant and Santos’s Narrabri coal-seam gas project.

“I’d welcome proposals from the market to deliver a HELE plant or deliver any other forms of generation in this state,” Mr Kean said following EnergyAustralia’s decision on upgrading its Mount Piper coal plant near Lithgow.

EnergyAustralia said yesterday it would boost capacity at its Mt Piper coal power station and was investigating options to expand coal supplies to safeguard against disruption to its existing mine. The power giant said it was investing to increase output by 80MW to 1480MW through the upgrade of two existing turbines. Mt Piper, scheduled to operate until 2043, can provide 15 per cent of the state’s electricity demand.

EnergyAustralia managing director Catherine Tanna said it was critical to keep existing coal plants in the mix for years to come as part of a transition to renewables.

“Something we’re all in violent agreement about with all stakeholders, whether they be customers or community stakeholders. We are now part of the transition to a new energy future,” Ms Tanna told reporters yesterday.

“We shouldn’t be having debates about whether the transition to a cleaner energy future will happen, because it is happening. The contest of ideas is about how we make sure it happens in the best planned, seamless way where we are always thinking about the best interests of the customers.”

Power baron Trevor St Baker in January revealed a China-backed plan to develop Australia’s first high-efficiency, low-emissions coal plants.

The proposed NSW location was mooted for Liddell or the site of the old Vales Point A power station, adjacent to the coal plant run by Mr St Baker.

However, Mr Kean cited figures showing new coal plants would cost $108 per megawatt hour, compared to firmed renewables at $75/MWh.

“Right now NSW gets the majority of its energy from coal and I see that continuing. But technology is driving the economics in delivering energy not only in NSW but around the country,” Mr Kean said.

Companies are weighing how to adapt to the changing power grid as ageing plants like Liddell exit and a swath of renewables works its way into the system.

Coal plant owners in NSW like EnergyAustralia, along with Origin Energy and Mr St Baker’s Delta, are considering either new investment in plants or tweaking output to maximise demand for coal amid cheap solar supplies during the day.

EnergyAustralia will also look to expand its sources of supplies after disruptions from the nearby Springvale mine near Lithgow, run by Centennial Coal, with the product potentially being trucked in from the Clarence mine.

“EnergyAustralia is investigating rail transport options to diversify coal supply to the power station,” the company said.

“Historically, there were six mines capable of supplying Mount Piper. Now there’s one — Springvale — and it faces operational and planning challenges.”

EnergyAustralia referenced the Mt Piper supply issues in a recent trading update. EnergyAustralia and Centennial are also investing in a new $200 million water treatment facility to handle mine water from the Springvale coal mine to re-use in the cooling system of the Mt Piper plant.

Source: The Australian