Published in The Age, March 14 2021
Last week’s announcement that the Yallourn power plant will close earlier than previously expected raises some big questions: will it be replaced in time, and are more such announcements around the corner? The answers have serious implications for not just Victorians but all Australians.
Australia’s coal-fired power plants are ageing and will be progressively retired over coming decades. But the timing of individual plant closures is highly uncertain, and their sheer size makes it hard for the energy market to manage sudden closures. The abrupt closure of the Hazelwood plant in 2017 triggered political concerns about higher prices and reduced reliability. More recent announcements by AGL (that the Liddell power plant in NSW will be retired) and Energy Australia (Yallourn), added to those concerns, even though each announcement came with seven years’ notice.
The problem has been years in the making and policy failure is at its core. During the climate battle fought by the Coalition under Malcolm Turnbull, a policy emerged that was designed to both drive down carbon emissions and ensure reliability of supply through the transition – the National Energy Guarantee (NEG).
Alongside these unbalanced renewable energy programs, the Energy Security Board (ESB) has been working to deliver the reliability side of the NEG and other changes to ensure that reliability is maintained. That work is unfinished. The upshot is a valid but unhelpful blame game: state governments accuse the federal government of failing on climate change, and the federal government accuses the states of risking higher prices and reduced reliability.