TransGrid predicts early coal closures
Australia’s fleet of coal-fired power stations face early closure due to rampant growth in renewables in a fast-paced move that piles pressure on achieving an orderly transition to clean energy, a blueprint by transmission giant TransGrid shows.
The NSW electricity grid owner has crunched six scenarios for the nation’s energy sector out to 2050 and found coal plants could be forced out of the grid up to 16 years early despite accounting for 70 per cent of supply currently.
Some 7 gigawatts of coal will exit the national electricity market by 2030 under current trends, 2GW more than anticipated, while a drive to deep decarbonisation would see the fossil fuel disappear from the system entirely by 2032 compared with the final coal plant exit date of 2048.
“The growth of renewables is challenging the economic viability of Australia’s ageing coal generators,” TransGrid said in its Energy Vision report to be released on Wednesday. “Our analysis indicates a high likelihood of early coal withdrawal across a range of future scenarios.”
In five out of the six scenarios, renewable energy supplies more than 70 per cent of the market’s annual energy needs by 2035 and more than 99 per cent by 2050.
“Our analysis indicates that, by 2030, with decarbonisation objectives aligned to a 1.5°C temperature trajectory, as much as 18GW of coal capacity could be withdrawn from the NEM – 13GW more than currently anticipated,” TransGrid said.
The forecast follows a warning made by Energy Security Board chair Kerry Schott on Monday, stating coal plants face being forced out of the power grid more than a decade early by the mid 2030s. The coal generators operating some of the last plants expected to be running in the grid – AGL Energy and Alinta Energy – have also conceded they may have to bring forward closure dates given the fast-changing market.
A string of factors could further accelerate the transition from coal to renewables, TransGrid said.
“Further cost reductions and deployments of renewables and storage driving down the price of electricity, making it more difficult for coal generators to remain profitable; more ambitious climate change policies; technical failure of coal units, driven by age and increased ramping in response to variable renewable energy; and a growing consumer preference for low emissions electricity.”
Broader pressure is growing from the UN from Australia to exit coal by 2030, commit to a net-zero target by 2050 and lift its ambition to cut greenhouse gas emissions. NSW Energy Minister and Treasurer Matt Kean said the state can stop using coal power within a decade, cautioning that the fossil fuel could be tipped out of the electricity market earlier than planned as solar increasingly undercut profitability.
TransGrid, which in May signed off on a $2.2bn power cable to transmit renewables between NSW and South Australia, said the transition to clean energy needed to be handled carefully.
“The increased likelihood of early coal closures highlights the importance of an orderly and planned transition, ensuring there is reliable, secure and affordable power as the system transitions to firmed renewables,” the electricity owner said.
TransGrid chair Jerry Maycock said there was “no time to waste” for the industry to take advantage of clean energy opportunities. “Our analysis indicates that the transition towards a clean energy future can create immense opportunity for Australia if we set ourselves on the optimal course – a course that will support not just decarbonisation, but also job creation and economic growth,” he said. “Our modelling shows that this future is achievable. But to realise this potential, the pace of change needs to rapidly accelerate. There is no time to waste.”’