The will-they-won’t-they saga of the closure of the Hazelwood power station in Victoria’s Latrobe Valley — finally confirmed by French owner Engie last week — is another display of shambolic energy policy in Australia.
For several years, policymakers have been aware of the impending closure of old coal-fired power plants as new capacity becomes available from gas and renewables, Australians curb their energy consumption due to rampant gouging by network owners and the need to transition to a lower emissions-intensive future required even by the paltry carbon abatement targets adopted by the Coalition.
The closure of Hazelwood, for example, has been discussed for the best part of the last decade — indeed, the Gillard government established a program to close down Australia’s most polluting power stations, including Hazelwood, but couldn’t agree on compensation with their owners. Now Hazelwood is going, without compensation, and with little in the way of planning for the workforce affected. It follows other coal-fired plants in NSW, Victoria and South Australia, closed or “mothballed” by their owners.
By leaving it to individual companies to make decisions, federal and state governments have effectively outsourced the main responsibility for the impacts of closures on local communities. The Victorian government responded to Engie’s announcement with a quarter-billion-dollar assistance package and an “economic growth zone”, but workers and communities are still left with massive uncertainty in regard to an event that everyone has known was coming but for which little planning has been done.
Don’t look to energy white papers for any evidence policymakers have been thinking about the impact of the transition to renewables on workers. The only workforce issues addressed in the most recent energy white paper, from 2015, relate to skill shortages in the energy sector and the need to train and import more workers, the latter on 457 visas. But then that paper virtually ignores renewable energy, has only one mention of climate change and lauds coal as “underpin[ning] our energy generation mix for some decades”.
And while Labor in office tried to establish an effective transition program, the energy white paper Martin Ferguson released in 2012 (which addressed renewable energy at length) similarly saw the only workforce issue as about skill shortages.
Meanwhile workers in areas like the Latrobe Valley have to deal with the uncertainty and economic fragility that comes from closure. The refusal of governments, and especially the federal government, to develop serious policy around transition to renewables and its impact on communities leaves governments reactive and prone to politicised policymaking. A particular problem is that generator closures tend to occur in regional areas, which are represented by conservative party MPs who are either climate denialists and enthusiastic boosters of coal-fired power or take a more realistic view of energy transition but belong to parties that do not.
A group of businesspeople, academics and investors have tried to address the gap by forming an “Energy Transition Leadership Forum”, which today released a proposal for an energy transition plan. The group comprises business figures such as Jillian Broadbent (also chair of the Clean Energy Finance Corporation), former Telstra chair and CSIRO chair David Thodey, Citibank chair Sam Mostyn investment banker Mark Burrowes as well as academics, clean energy sector representatives and environment group leaders like Geoff Cousins.
A key part of the transition plan is establishing ground-up strategies for diversification developed by local communities in collaboration with governments, unions and generator owners, designed to start developing alternative industries and sources of employment ahead of closure, rather than following closure, as will happen with the Victorian government’s plans.
You’d think this would be a policy no-brainer, especially for an “agile”, “innovative” government that is focused on diversifying Australia’s economy to take advantage of the historical opportunities for growth we’re presented with. But at the moment it’s the supporters of energy transition who are doing the thinking about the inevitable impact on local communities, while opponents apparently think those communities can be frozen in amber.
If Australian Politicians were not so anglophillic and looked to other successful economies other than the US and UK they would understand that a mix of generation both of technology and geographic location is essential. The previous owners of Hazelwood and Loy Yang B, International Power fought tooth and nail against the Carbon Tax and in doing so completely took their eye off the ball. Whilst they successfully negotiated an extension of Hazelwood mine with the State Government they thought they could simply keep Hazelwood going as a cash cow by burning this additional fuel at the historic low efficiencies of 25 to 28%. What they should have done was to knock down Hazelwood in stages and build modern supercritical brown coal generators of around 600 to 900 MW each. Such units would operate at efficiencies approaching 43% and could use much of the existing infra structure such as the grid connection and cooling water pond. As the site is already used for power generation the environmental issues of green field sites would have been minimal.
Of course such facilities are un-bankable and such a project are therefore impossible to build I here you say, but Germany has managed it. Since 2000 the German Government renounced nuclear power and private power generators and have built a number of such large brown coal fired units at Niederaussum (1 x 1000 MW) , Neurath (2 x 1100 MW) , Schwarze Pumpe (2 x 800 MW) Lippendorf (2 x 933 MW) and Boxberg (1 x 900MW).
Of course people have canned these German Stations as environmental terrorism, but such hyperbole fails to recognize that a mix of renewable and some “New Fossil” is required if we are to avoid the Nuclear path and have a reliable electricity system. Why is it that the Germans who on some days can supply their whole country from renewables see the need for some coal technology? And how do they manage to make these projects bankable? The eight large units listed above show it can be done AND by the private sector.
It is only if you think like a Englishman, an American or an Australian politician that such things are impossible.
The trouble is that the balkanisation of our Power System by that genius Kennet and his treasurer Stockdale has left us in the lurch. The rent seekers who own the facilities now are only interested in short term cashflow and have no commitment to Australia and it’s long term future let alone their workforces or the region in which they live.
As long as we leave our future to them we should be worried.
RJG
Toongabbie
Victoria
Toongabbie
And Furthermore:
The idea that Mr St Baker can use Hazelwood Power Station as spinning reserve is an interesting one. Brown coal stations can only turn their output down to around 60% because of the need to sustain sufficient energy in the boiler furnaces to dry the very wet brown coal. To turn the stations down below 50% requires the burning of expensive auxiliary fuels in large quantities to “keep the fires alight.” Hazelwood burns briquettes imported from Germanay for this, whilst Loy Yang B burns natural gas. At the low loads envisaged i.e. spinning reserve, fuel efficiency is very low and one can assume the spot electricity price is very low at these times also. Thus the plants would be running for most of the time at a very large loss. The only way plants would be economic doing this would be to have capacity payments far above those that exist in the market place now (FCAS).
The geniuses running the electricity market, AEMO are mostly lawyers and accountants who are far more interested in the relative competition within the market than they are with supply reliability and long term energy sustainability. They have shown through their actions that the idea of any significant capacity payments are an anathema to them so I wouldn’t hold my breath on this idea until we have OUR system black.
Mr St Bakers Company owns Vails Point which is different from brown coal stations; it burns black coal. Such stations have a far greater turn down 20 to 30% of maximum output and are far more fuel efficient at these loads with careful control of combustion air. So it may be a practical proposition for this station.
The use of natural gas as an auxiliary fuel raises the question of why we ship vast quantities of gas to China and Japan with negligible use in Australia.
Modern boilers such as Loy Yang B and Loy Yang A could be converted to use both natural gas and brown coal with reasonable efficiency for around $50 million per unit. The carbon intensity for a unit running on natural gas would be about half what it is on brown coal.
Of course using natural gas at World Parity Prices would be expensive, however why should we pay world parity price for our own resources. The US government sets aside a certain amount of natural gas for domestic use. Why can’t we?
This of course is a rhetorical question. We CAN coralle some domestic gas, but it would require our national government to stand up to big Mitch from the mining lobby and all his cohorts in the oil industry. Something both sides of politics seem unable to do.
RJG
If electricity generation had not been privatised in Victoria, the SEC had planned to close Hazelwood many years ago and it would have planned for its replacement by a more efficient power station and, who knows?, may have made a start on renewable energy power generation
I worked for Latrobe City Council for a little while. The job was supposedly about a clean jobs post coal future (how it was sold to me) but in reality it was selling “clean coal” and begging the Federal government for handouts. There was no planning, no consideration of the closure of Hazelwood, despite my raising the issue with senior managers several times. Councillors (all utterly incompetent) had less than no interest, none of the executive wanted to start to consider it. They just thought the Federal and State govt would provide.
The usual short-term mentality bared for all to see: energy executives with their attention focussed on the next end-of-financial year figures.
In the 21st century the terms ‘CEO’ & ‘visionary’ are mutually exclusive in Australia.
The obvious transition for a coal-fired steam power station is to convert it to a gas-fired steam power station. The grid is already focused there, as is cooling water and towers. As the community still has jobs, the local economy does not collapse.
True, combined-cycle gas turbines do not backup windfarms when the wind doesn’t blow, as they respond much more slowly than open-cycle gas turbines. As the targets for carbon emissions tighten over the years ahead, we will have to replace all open-cycle gas turbines with the more gas-efficient combined-cycle gas turbines anyway. Surely it is much better planning to go the whole hog immediately, while keeping the community in work.