Statement on Liddell

AGL today issued the following statement on Liddell:

“AGL has committed to the closure of the Liddell power station in 2022, which is the end of its operating life.  AGL has provided this advance notice to avoid the volatility created by the sudden exit of other coal-fired power stations. AGL is actively assessing what capacity will be needed post 2022 and we, along with other market participants, will consider AEMO’s report in light of these plans.”

Many readers of this blog will know that I have been an advocate for advanced notice of power station closures for some time. This article (written three years ago) summed up my concerns about sudden closure with this statement (p. 36):

Given the sunk-cost nature of existing power generation infrastructure, the intuitively logical short-run policy option is to ‘do nothing’ and let existing assets continue to meet demand until they fail. At such a point, prices would increase prompting new investment. However, reduced maintenance investment and mothballing plants makes the aggregate supply function inherently more uncertain. Given rising forced outage rates, a rapidly ageing capital stock and the slow (and unpredictable) speed of recalling mothballed capacity, reliability of supply events will become harder to predict. Prices will become more volatile, with long ‘bust’ periods followed by sudden ‘spikes’. Add to this the compressed investment timeframes for requisite conventional replacement capacity if disorderly (rather than orderly) exit from the market occurs, and one can see how, in a practical sense, this is unlikely to be acceptable to policy makers who are accountable for security of energy supply in the long-run.

2 Responses

  1. Peter Davies

    What about a transition strategy that utilises those assets on site such as the % of boiler/turbines & grid connection infrastructure with acceptable reliability still inherent and adding a new front end flexible slid fuel technology able to provide clean gas for firing with up to 100% co-firing capacity with sustain-ably sourced regenerative carbon fuels, but still able to run on coal during emergencies?

    Reply
    • Cathlin Thurbon

      Hi Peter,

      AGL currently has a plan to run a global tender designed to elicit a range of options for the use of the Liddell Power Station and site from 2022. Obviously there are current machinations that we must wait for the outcome before plotting the next course of action. But recently in our Rehabilitation Report we outlined the Transition Project. The Transition Project will be an outcome-orientated process designed to determine the best
      and most innovative use of the site, existing infrastructure and technologies from 2022.

      We would expect that solutions as you have described above are exactly the type of proposal we are seeking to elicit alongside a host of others – thanks for the feedback and apologies for the delay in responding.

      Reply

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