4,200 MW of coal power could extend into the next decade as power supply concerns grow

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4,200 MW of coal power could extend into the next decade as concerns grow that the state could spiral into an electricity supply and price crisis if they are retired.

The 1320 mega-watt Delta Electricity’s Vales Point on the Central Coast may extend its life by four years to 2033 as its owners advised AEMO that it could provide capacity to that date and possibly beyond.

New South Wales Premier Chris Minns stated there will be an independent review in August 2023 to see if NSW needs to strike a deal with Origin to keep Eraring open beyond 2025.

Eraring is Australia’s largest coal generator, producing 2,880 MW of coal-fired power.

The result of the review is expected by the end of the year.

The backtracking on early coal plant closures comes amid escalating concerns that Australia cannot maintain reliable and affordable electricity supplies as more renewables enter the market and coal plants exit.

A decision is expected to be reached by the end of the year.

The possibility of two of the largest polluting fossil generators extending into the next decade puts Australia’s 2030 climate targets of 82 percent renewables and 43 percent cut in carbon emissions at risk.

No commercial decision on Vales Point yet – AEMO advised of extended availability

With a capacity of 1,320MW, Vales Point supplies just over 10 per cent of New South Wales’ power. 

The plant includes two steam turbines and is located on the shores of Lake Macquarie, close to its fuel source.

Plant A, which was decommissioned in 1997, was opened in 1963. B station was opened in 1978. Vales Point supplied 2,195 MW of electricity at the height of its generation capacity. 

But 45-year-old technology comes with caveats. Carbon Monitoring for Action estimates this power station emits 9.32 million tonnes of greenhouse gases yearly due to burning hydrocarbon coal. 

As of 2021, the Vales Point Power Station emits more toxic nitrogen oxide pollutants than allowable under the NSW Protection of the Environment Operations (Clean Air) Regulation 2021.

To continue operating legally, the operator applied for an exemption under its licence 761, granted on 15 December 2021 with a reduction variation and additional conditions imposed by the New South Wales Environment Protection Authority.

The Czech power plant owners said Vales Point continues to be a key asset in the transitioning energy market, providing essential firming capacity to support the growing integration of renewable energy and helping maintain reliable power supplies.

Delta said no commercial decision had been made yet, but given the uncertainties surrounding the capacity of electricity resources over the next 10 years, and the urgent need to maintain system security, it has advised AEMO that Vales Point can continue to provide capacity until at least 2033.

Between 262 and 450 MW supply gap if Eraring closes

The Eraring power station produces around a quarter of the total energy generated in NSW.

With a capacity of 2,880 MW, it is the largest power station in Australia.

Ahead of the March 2023 state election, then Labor hopeful Chris Minns floated the possibility of keeping Eraring open beyond August 2025.

He won the election and has ]doubled down on the possibility of keeping the plant open to avoid blackouts and maintain stable electricity prices.

The proposal is now being evaluated as an independent technical panel draws up a report into the robustness and capability of the NSW power network over the next few years.

Key to the findings of the report commissioned by the New South Wales government will be data provided by AEMO, including its updated assessment of the outlook for supply and demand balance.

In its Engineering Roadmap to 100% Renewables 2024, AEMO said the most important target was to achieve 100 per cent instantaneous renewables capability.

In that report, AEMO said there were four main targets: 

  • Introducing more Low-cost renewable energy
  • More Firming technology 
  • New transmission and modernised distribution networks
  • 100% instantaneous renewables

The 2880 MW Eraring plant shutdown could leave a gap of between 262 MW and 450 MW in firming capacity in the summer of 2025-26.

Firming capacity is provided by generating plants that produce on demand to back up weather-dependent wind and solar power.

In June 2023, AEMO Chief Daniel Westerman said the renewable energy transition is not moving fast enough to meet the federal government’s 2030 targets, despite a massive pipeline of projects waiting in the wings.

Mr Westerman says that while the market is responding to the anticipated closure of coal-fired power stations with investment in renewable energy, firming generation and storage, it is too slow to meet those targets.

A strong pipeline of potential future generation projects is proposed for the National Electricity Market, totalling over 200 GW. 

Half of these are wind projects, with 40 GW of proposed battery storage.

But many of these projects are bogged down in planning bureaucracy and lacking transmission infrastructure.

Delays in constructing the $5.9 billion Snowy 2.0 pumped hydro project and building new transmission have contributed to the worries.

Following the 11-hour notice of the closure of Hazelwood back in 2017, which led to an energy supply and price crisis, new regulatory requirements over coal plant closures came into effect. 

The regulations stipulate that coal power plant owners must give 42 months’ notice of closure, meaning that a decision could come in about mid-2025 if the plant is to be shut in 2029.

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