NSW to ditch coal power by 2040 with final plant to close early
The final NSW coal power plant will be shut by 2040 at the latest after EnergyAustralia’s decision to bring forward the closure date of its Mt Piper facility by at least two years in a bid to hit new green climate targets.
The power giant was due to run Mt Piper until 2042, but will accelerate its retirement after vowing to be out of coal by 2040 and conceded the date could come forward again into the 2030s.
“We will be out of coal by 2040. Could it be earlier? Yes, and if it’s earlier it’s because we’re going to get a better outcome for customers, communities and our workers by being earlier,” EnergyAustralia chief executive Mark Collette told The Australian.
The move underscores an accelerating switch away from coal despite the fossil fuel meeting 70 per cent of national electricity demand. Power companies are under pressure from investors and financiers to dramatically boost their plans to cut pollution even as the pathway for phasing out fossil fuels remains highly contested.
Challenges to the future of coal have piled up this week with AGL Energy stunned by a major shareholder climate backlash, three of Victoria’s coal operators including EnergyAustralia and AGL hit with legal action from Environment Victoria and even China declaring it will no longer build coal projects overseas.
Energy ministers will meet on Friday to thrash out a contentious energy reform dubbed ‘‘Coal-Keeper’’ which critics, including Victoria and the ACT, argue will prop up coal at the expense of cutting emissions.
“I can see all the state governments saying with one eye that OK coal is on the way out, but what is coming in? It’s bumpy in that the policy is not consistent across the nation and states are taking different actions in different ways,” Mr Collette said.
While NSW coal power will end by 2040, Victoria’s Loy Yang A is set to run until 2048, while Queensland has the most modern plants in the country.
Australia’s energy ministers at the August meeting gave initial backing to a controversial new payment incentive to keep coal power generation in Australia’s electricity system, swatting away renewable investors who demanded they reject the plan.
NSW has given in principle support to federal Energy Minister Angus Taylor but asked for the ability to opt out of the scheme if its plans for major renewable energy zones and building 2 gigawatts of long duration storage by 2030 are met.
The 1400 megawatt Mt Piper plant, 25km from Lithgow in NSW’s central west, can meet the energy needs of 1.2 million homes or 12 per cent of the state’s energy supply.
The facility will be the last coal plant standing, with AGL Energy’s Liddell and Bayswater stations due to close in 2023 and 2035 respectively while Trevor St Baker’s Vales Point and Origin Energy’s Eraring will start shutting units at the end of this decade.
EnergyAustralia earlier this year brought forward the closure date of its Yallourn plant in Victoria by four years to 2028, after a secret deal was hatched with the Victorian government to subsidise its operation.
Still, a mix of pumped hydro, batteries and gas will all form options to replace the lost Mt Piper capacity, according to EnergyAustralia, citing its 350MW Wooreen battery in Victoria’s Latrobe Valley, pumped hydro at Mt Piper and Queensland’s Kidston and the Tallawarra gas plant in NSW.
“We fully expect the rise of renewables will continue to be very strong, with lots of solar and lots of wind, but neither of those forms of generation come with controllable capacity. Coal comes with emissions but it comes with reliability. Today, that reliability is what is the bedrock of the system,” Mr Collette said.
“It’s a little bit unknown exactly what will be the bedrock of the system in the future. It could be pumped hydro and batteries, it could be different forms of generation. Coal gives an option until we’ve got those newer forms of generation.”
Coal facilities are increasingly having to switch off during daytime hours when high solar supplies undercut them on price.
NSW Energy Minister Matt Kean has been warning the state’s coal plants will exit early as the fossil fuel struggles to compete.
It’s expected NSW will look to negotiate directly with coal plant owners like Mt Piper on potential underwriting deals to ensure coal remains in the system.
EnergyAustralia plans to reach net zero greenhouse gas emissions by 2050.