CEO Andrew Vesey has advised that AGL are ordering the equipment they need to convert Liddell’s turbines to “synchronous condensers” to fim up solar and wind energy. AGL’s plan for a clean energy hub to replace Liddell is going ahead, according to Ben Potter in the AFR.
Beyond tha,t the same edition of the AFR has an article explaining the conundrum of the Liddell fight, making particular reference to what the advice from AEMO (the Australian Energy Market Operator) actually said. This issue was raised in the comments thread of the post Energy crisis? What energy crisis? AEMO boss Audrey Zibelman took exception to an article Malcolm Turnbull’s bid to flog Liddell to Alinta ill-advised: AEMO.
This article in response to Zibelman’s letter – The fight about AGL’s Liddell power station explained – was jointly written by Ben Potter and Angela Macdonald-Smith, both AFR journalists who separately write regularly on energy matters. They’ve made a special effort to get their facts right.
Liddell was sold as a package by the NSW government with Bayswater because the pair share coal transport and water infrastructure. Splitting them now would be problematic and basically doesn’t make sense.
Liddell was commissioned in 1973 as a 2000MW plant, so will be 50 years old in 2022. Since buying it in 2014 AGL has rated its capacity as 1680MW. However, it is struggling to produce that much. In the December half of 2017 it ran at 40 per cent, down from 52 per cent in 2016-17. AGL has spent $123 million since 2014 keeping Liddell chugging along, and expects to spend a further $150 million by 2022. A Worley Parsons report finds that a further $920 million would be required to keep Liddell open for a further 5 years, to please Malcolm Turnbull and company. Alinta contest that amount.
While consultants tend to give their paymasters what pleases them, the fact is that on information before the AGL board power from a revamped Liddell would be priced at $106/MWh compared to $83 for the planned replacement power.
It seems that AEMO in its advice about replacing Liddell has rated the clunker at a nominal 1800MW.
The base case for AEMO is that AGL will only do what it is already committed to – expand Bayswater by 100MW and complete the Silverton wind farm – and that no-one else will do anything at all to make up the shortfall. The result is that 200,000 homes would lose power for up to five hours once in every three years.
That is the least likely outcome, and not a disaster, but would you believe, that is what all the panic is about!
AEMO estimates that 850MW of dispatchable supply will be needed by 2026-27 (from me, there is a question as to whether a revamped Liddell would be dispatchable in the context of what the market will require at that time) to reduce the prospect of load shedding once in 10 years.
AEMO says that if AGL’s stage 1 is built on time – an additional 570MW of gas, solar and demand response – the risk of outages will be 174,000 homes losing power for 3.6 hours every four years.
If, however, AGL delivers stages 2 and 3 – an additional 570MW of gas, 80MW of demand response, 750MW of new solar, wind with a 250MW battery at Liddell – 172,000 homes risk losing power for 2.2 hours once in every 20 years.
Zibelman said in her AFR letter:
- “We noted that using a competitive market to meet defined reliability needs is preferable to designating a single participant from the perspective of gaining the best outcomes for consumers.”
To sum up, AGL want to produce 2000MW of power with an extra 250MW big battery for an investment of $1.4 billion to supply truly dispatchable power for $83MWh:
The 250MW battery would be used to even out frequencies, take the peaks off spot prices, much like the Tesla battery.
In this case the problem of site restitution after the Liddell dinosaur is closed is taken care of.
The alternative is to spend $920 million to supply essentially unreliable, inflexible power for a further five years, kicking the can down the road on site restitution and what to do to replace lost capacity.
It’s a no-brainer. To me it seems that AGL is planning to more than double what they are currently getting out of the limping Liddell.
AFR’s letters section today has nothing from AEMO.
In the same Thursday 12 edition of the AFR Matthew Warren has an opinion piece Why do politicians think that there are votes in coal? Warren is Matthew Warren is chief executive of the Australian Energy Council, representing, inter alia, Australia’s coal and gas generators.
Very simply, he says that renewables are the new normal, and are no longer dependent on Renewable Energy Target incentives. AEMO predicts price reductions from investment in renewables. It takes seven years to plan and build a coal-fired power station producing expensive and inflexible power. The plant would need to last another 50 years to make a proper return on investment. No-one in their right mind is willing to take the risk of producing an expensive stranded asset.
Warren sees a wave of 4000MW of renewable energy entering the NEM market over the next two years.
- Aggregating the suite of recent electricity market modelling, we can get some idea of what is likely to get built through to 2030: around 71 per cent of new investment will be in wind and solar, with the rest made up of firming technologies including gas peakers, pumped hydro (assuming Snowy 2.0 proceeds) and battery storage.
That’s $23 billion worth of investment.
The last thing we need is politicians getting in the way, or actively interfering, producing confusion and sovereign risk in the market.
The question is, does Malcolm Turnbull have a brain, or has he mislaid it or parked it somewhere?
New coal power is dead, leaving aside questions of emissions and climate change.
Here’s David Rowe’s cartoon from when the Turnbull government first started this insane episode: