Recent calls from the federal government for AGL to keep the Liddell coal-fired power plant open beyond 2022 is a bit like a footy club paying big money for its champion full forward to play on despite a high chance he won’t play the full season.
It’s what can happen when there’s a lack of forward planning, a touch of nostalgia and a blinkered view of success.
At this time of year, football matters, but in the case of Australia’s energy system, the stakes are much higher and it affects us all.
Built in 1971, the Liddell power station is scheduled to retire by 2022 but not before the company will have spent more than $280 million on works to keep the ageing plant on its feet since buying it in 2015.
During a heat wave earlier this year, two of Liddell’s four generator units were knocked out due to unforeseen boiler tube leaks – despite its owner spending $123 million to avoid this. NSW did not have enough energy and a certain aluminum smelter had to drop its consumption dramatically to keep all the household air conditioners going.
It’s the fear of blackouts, and of escalating energy prices, that the Coalition says is motivating its push for Liddell to remain open beyond its nominated scheduled operating life.
So much so, it has not ruled out propping up the power station with taxpayers’ money if AGL tries to sell and can’t find an interested buyer – something, that recent Essential Media research suggests, many Australians would oppose.
But the Liddell experience has already shown that propping up ageing power plants with more investment cannot guarantee reliability. Just like repeated knee operations can’t bring back a star player’s glory years.
The Liddell standoff coincides with Governments ongoing deferral of a decision about a Clean Energy Target, outlined as part of the Finkel Review.
It’s a paradox that just as the government seems panicked by an impending energy shortfall due to the gradual exit of ageing and unviable coal infrastructure, it resists the 50th recommendation of the Finkel Review – the CET – which would unleash billions of dollars of new investment in clean and reliable energy generation by providing certainty beyond 2020. If they get a CET right, this investment will come from private investors rather than taxpayers.
Private investors have made it clear, they are prepared to investment in the future energy system, but that will be in new renewable energy and battery technologies. It’s a global trend that reflects the reality of these technologies now being the lowest cost form of new generation. Time is running out to bring enough new clean energy projects online before a number of coal-fired power plants reach the end of their natural life or more companies deem them to be unviable.
We have the technology and investment interest to fill the shortfall. Which is why the time is now to put the right long-term policy settings in place, including the Clean Energy Target, to allow investors to spend confidently and minimise risk. Without a CET, the investment just won’t flow. Years of policy instability and an energy market still dominated by old coal – built by taxpayers – means the risk is too high.
In the lead up to 2020 – and fueled by the Renewable Energy Target and plummeting technology costs – more than $8 billion in clean energy projects is being rolled out.
Electricity generated by wind and solar is now the lowest-cost power that can be built today. Increasingly these projects are being supported with storage to improve their ‘dispatchability’. Even paired with energy storage, wind and solar technologies cost less than new gas and well below what is possible from the cheapest possible new coal plants.
At the same time, major electricity market reforms are already coming through that shift the focus away from ageing coal power stations assisting the stability of the grid. The Energy Security Board and other market bodies know coal power cannot be relied upon for much longer.
Five years from now, when Liddell is switched off, these technologies will be even more attractive commercial propositions and, if the Finkel implementation goes to plan, the system will be better managed to accommodate them.
Energy companies are already planning for five years ahead and more.
We need governments to do the same, or we will continue to stay in a vicious cycle of blame, escalating prices and energy insecurity – doing little for consumers, politicians or the planet.
Like the champion full forward whose time has come, let’s acknowledge the role coal-fired power stations like Liddell and Hazelwood have served Australia in helping to build our collective success.
But let’s also admit the time for clinging to the champions of the past is over – we need renewal and we need it fast.
This opinion piece was originally published by RenewEconomy. Thanks very much to its Editor Giles Parkinson.