Power reliability at risk by 2030 after Yallourn closes
The pending early closure of the Yallourn power station in 2028 has triggered a warning from the operator of the country’s electricity market of an increased likelihood of blackouts in Victoria and South Australia late this decade unless new on-demand generators are built.
However, the Australian Energy Market Operator noted that new projects have already been announced and voiced optimism that although they do not yet qualify as committed projects, they are “very likely” to proceed, improving the outlook for reliable supply.
The projects in the wings include a 350-megawatt battery announced by EnergyAustralia in March at the same time the electricity and gas supplier brought forward the formal date for the closure of the Yallourn brown coal-fired plant by four years from 2032.
It also includes the new 300MW Tallawarra B gas “peaking” power plant finally confirmed by EnergyAustralia last week for NSW, where federal Energy Minister Angus Taylor is targeting 1000MW of new dispatchable generation capacity to replace AGL Energy’s Liddell coal power plant, which is due to shut in 2022-23.
Mr Taylor has also urged energy suppliers to “step up” and invest in new on-demand generation capacity in Victoria to offset the loss of the 1480MW baseload Yallourn plant.
Alex Wonhas, chief system design officer at AEMO, said a recalculation of the outlook for supply given the earlier Yallourn closure and new connections to the grid since the operator’s last forecast in August found that tougher interim standards for reliability would be breached in both Victoria and South Australia in 2028-29 and the following year unless further commitments were made to build on-demand generators.
AEMO had previously assumed that one 350MW unit at Yallourn was retired in 2029-2030 but that the other three remained running until 2032.
But Dr Wonhas added that more dispatchable capacity is expected to be built with the right market settings and pointed to projects that have been announced.
Last year alone, more than 40 projects comprising almost 4900MW of capacity began exporting into the grid, while an additional 300 generation and storage projects totalling 55,000MW are proposed across the National Electricity Market. The Victorian Big Battery project, a 300MW storage system to be built in Geelong by France’s Neoen, is one that recently reached financial close with the help of funding from the Clean Energy Finance Corporation.
“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.
“Certainly around Yallourn’s exit is welcome as it gives the market ample opportunity to prepare for a smooth transition without loss of reliability of excessive price impacts on consumers.”
Stricter notice requirements for closures of power plants are among a raft of measures proposed by the Energy Security Board, the top energy policy advisor for federal and state governments, so the power system can better prepare for the shutdown of large chunks of baseload capacity. Governments and regulators want to avoid the sort of power price hikes that occurred when the Hazelwood coal power generator closed with only five months’ notice in March 2017, particularly given the threat of premature closures due to the collapse in wholesale power prices.
The “interim reliability measure” used to assess the outlook involves keeping “involuntary load shedding” or customer blackouts to below 0.0006 per cent of energy demand in a region in any year.
AEMO said the exit of Yallourn may also impact the security of the power system but it has yet to study that in detail.
NSW’s risk of enforced blackouts has reduced since AEMO’s report in August because of recently committed generation projects but it still breaches the reliability standard late in the decade.
That risk jumps sharply in 2029-2030 after Delta’s 1320MW Vales Point coal plant on NSW’s Central Coast is due to close.