The early exit of coal from Australia’s energy generation system

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The discovery of good quality and easily accessible coal sparked Australia’s incredible growth and prosperity in the 20th Century but it is now becoming abundantly clear that the early exit of coal is on the cards.

Australia was reliant on coal for over 100 years and still is. But things are changing very quickly.

The increased reliability and efficiency of renewable sourced energy and storage, including rooftop solar, industry-scale solar farms, wind farms, and battery technology, has pushed legacy coal generators’ backs to the wall.

In straightforward terms, coal generation is already struggling, and generators are bringing closures forwards by years at a time. 

The National Energy Market is still in transition. Australia’s energy market was sent into shock when Victoria’s Hazelwood was shut down abruptly in 2017, sending prices through the roof.

The shockwaves reverberated so harshly on homes and businesses that the Federal Government passed legislation to ensure that no energy generation player could exit the market so quickly with such consequences ever again, hence introducing a three year notice period.

In this blog series, we look at all the factors that shaped this incredible transformation over such a short period of time.

The historical role of coal in Australia and the National Energy Grid

Every story has a beginning and eventually an end. Coal was first discovered in 1791 Coal Valley in New South Wales, which became the City of Newcastle.

In this blog post, we dive into the historical role of coal in Australia

The electrification of Australia began in the late 1880s, with the NSW town of Tamworth becoming the first to be lit by incandescent light. Victoria’s Latrobe valley discovery of brown coal in the 1920s kicked off a sequence of events that galvanised pre-WWII coal power generation.

In the 1950s, black coal discoveries in NSW and Queensland saw Australia’s addiction to cheap coal power skyrocket as the aluminium smelting business took off. 

In the 2020s, the electricity retailers are calling time on coal. It is simply not economically viable.

Why are coal plants closing ahead of schedule?

Electricity generators are bringing forward the closure of coal power plants because they are not viable, put simply, coal plants are closing early because they are no longer profitable in today’s market reality.

Coal power plants must operate 24/7 if they are to compete. But as more solar comes into the market, often forcing negative pricing, it is clear that coal cannot make the numbers work.

Coal power plants suffer from a handicap called inertia.

This means that they cannot fire up quickly to meet spikes in demand.

The glut of rooftop and industrial solar flowing into the grid, coupled with the increasing total capacity of rapid release batteries in the system, means they can no longer compete.

The shape of the Duck Curve may mean that coal can keep afloat for now, as it capitalises on high prices when the sun goes down, but that will all change as more and more battery storage is added into the grid.

The timeline of Australia’s coal power station closures

One by one, Australia’s gentailers are bringing forward the dates for the closure of their coal power plants. The timeline for the exit of coal is changing rapidly. 

The closure dates for Liddel, Eraring, Yallourn have already been brought forward. The Australian Energy Market Operator has also accelerated its timeline, predicting that the sun will set on Australia’s last coal generator by 2043. 

Given the way things have been going, we can expect that the closures timeline will also be accelerated somewhat. 

In this blog post, we look at the current timeline of closures for Australia’s coal generation fleet.

What will the Australian National Energy market look like after coal’s exit?

The entry of renewable energy as a mainstream energy source will reshape the National Energy Market and many people ask what the National Energy Market will look like after the exit of coal.

No commodity ever moves in a straight line on the market, and the switch will affect energy prices. In this blog post, we look at the projections for the future energy market without coal.

Rooftop solar, industrial solar farms, wind farms and, of course, industrial-scale batteries will all play a big part in the change.

But there are other energy generation disruptor technologies such as biogas, Green Hydrogen, geothermal, algae power, embedded solar, tidal power and others that may become viable in the future.

Don’t miss out on all the latest energy news 

Keep an eye out for this upcoming blog series on the exit of coal.

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