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Taskforce assesses risks of AGL’s Liddell plans

Major east coast power users and the nation’s top regulators have been called to high-level meetings over the future of AGL Energy’s Liddell coal station as a joint federal and NSW government probe assesses risks to the electricity grid from its planned exit.

Federal Energy Minister Angus Taylor and the Berejiklian government announced in August the creation of a commonwealth-led taskforce to consider extending the life of Liddell or replacing the baseload station which supplies more than 10 per cent of the state’s power needs.

The Liddell taskforce — overseen by deputy federal energy secretary Rob Heferen — held talks with the nation’s largest single electricity user, Tomago Aluminium, along with the Australian Energy Market Operator, the national rule-maker and regulator, as it gathered information over the potential repercussions of the plant’s exit for the fragile electricity system.

Tomago — whose owners include mining giant Rio Tinto — is particularly critical to the taskforce due to its weight in the market and a hedge contract it holds with AGL that runs until 2028.

Mr Taylor told The Australian he wanted to ensure NSW and the broader electricity network did not endure a repeat of market volatility that followed the closure of Victoria’s Hazelwood coal plant in 2017.

“We are focused on genuine like-for-like replacement or life extension. It’s not good enough to have a planned closure with no planned alternative — that’s what happened with Hazelwood, and we can’t afford to see a repeat of that.”

The federal Department of Environment and Energy is heading up the investigation. Key government officials who have met with stakeholders include James White, who is advising on the energy transition to renewables from coal including specific oversight of the Liddell taskforce, and energy official Rachel Parry.

The NSW Department of Planning and Environment’s principal energy adviser Cameron O’Reilly is managing the taskforce on behalf of the state government and has been joined in meetings by deputy energy secretary James Hay and NSW Chief Scientist Hugh Durrant-Whyte.

AGL has agreed to add an extra year to the planned retirement of Liddell until 2023 to avoid supply shortfalls in the national power grid over peak summer months amid speculation the creation of the taskforce may have reopened the potential for suitors to dust off plans to acquire the plant.

Alinta Energy and power baron Trevor St Baker both remain interested buyers, although AGL is not open to a sale and holds other generation plans for the site.

AGL’s replacement plans for Liddell include a 100 megawatt upgrade to the Bayswater coal plant, a 250MW pumped hydro facility at Bells Mountain and a 250MW gas power station at Newcastle along with renewables and battery options.

Concerns have flared within the industry that the state and the broader electricity grid face a repeat of the market chaos that followed the hasty closure of Hazelwood two years ago, which contributed to a 40 per cent surge in power prices.

With coal providing 80 per cent of NSW’s electricity and the state importing 95 per cent of its gas, NSW Energy Minister Matt Kean has warned the government must be realistic about renewables and keep other supplies in the mix ahead of Liddell’s closure.

Source: The Australian