EnergyAustralia’s 1,480-megawatt Yallourn coal plant has become the latest casualty in Australia’s transition to renewable energy and will close four years early in mid-2028.
Yallourn supplies about a fifth of Victoria’s electricity needs and EnergyAustralia will offset the loss of the plant by constructing a 300-megawatt battery in 2026.
Electricity has been generated at Yallourn for more than 100 years, and the brown coal plant was due to shut down in 2032 when the brown coal supply at the mine was expected to be exhausted.
However, the historic lows of wholesale electricity prices are putting tremendous pressure on coal generation.
Even the most efficient coal plants are struggling to turn a profit in the current climate.
Parts of the Yallourn plant were built in the 1970s, so maintenance costs have a big part to play.
It runs on lower quality brown coal and ranks as one of the dirtiest power stations in Australia.
According to the Clean Energy Regulator, Yallourn produced 12.4 million tonnes of greenhouse gas emissions in the 2019/20 financial year and produced an average of 1.28 tonnes of carbon dioxide equivalent emissions per megawatt-hour of electricity generated, one of the highest in the country.
It is also one of the most inefficient plants in the country, having broken down 50 times since December 2017.
Only three brown coal plants still operating in Australia
The early closure of the Yallourn would leave AGL Energy’s Loy Yang A power station and the Loy Yang B plant owned by Chow Tai Fook Enterprises, which also owns Alinta Energy, as the last two brown coal power stations in Australia.
EnergyAustralia has entered into an agreement with the Victorian state government to create a ‘safety net’.
The agreement has not been made public, but it is thought that the Victorian government has underwritten power prices or has given a last-resort investment guarantee to prevent an even earlier closure.
Federal Energy Minister Angus Taylor has warned that the reliability of Australia’s energy grid could be under threat as a result of the early exit of Yallourn.
He also stated that the country could face energy price hikes reminiscent of the Hazelwood closure in 2017.
Others, however, are confident that the steady stream of renewable energy and storage coming into the grid will more than offset the Yallourn exit.
EnergyAustralia’s 300 MW battery will be able to run for four hours before needing a recharge and is just one of many renewable energy projects proposed in the Latrobe Valley.
Yallourn has now become the second coal generator to announce closure, following AGL’s Liddell plant in NSW’s Hunter Valley, which will close in 2023.
Liddell was due to shut earlier, but the Federal Government put tremendous pressure on the company to keep it open till 2023.
It seems that the exit of coal generation is speeding up and has become inevitable. However, the transition process needs to be managed.
Coal still provided the majority of generation in the National Electricity Market in 2020, at 67 percent.
Origin’s Eraring plant could be next on the list to close
Origin Energy’s 2,880 MW Eraring coal-fired power plant could be next on the list.
CEO Frank Calabria said the announced closure of Yallourn was a sign of the times, in that the energy transition was accelerating at a rapid rate.
He said that Eraring – the biggest coal-fired plant in the country – has responded to market changes and adapted to the new reality of low or negative prices during the day, but it did not escape the risk of early closure.
Origin is planning to build a 700 MW battery at the Eraring site.
Victoria’s energy minister, Lily D’Ambrosio said on Wednesday that Victorians should be “absolutely confident” the state will have more than enough power post-2028 to handle the Yallourn closure and said prices shouldn’t rise because there was enough time to plan.
The Yallourn closure will slash EnergyAustralia’s carbon emissions by more than 60 percent.