Delaying coal power exits in Australia risks power supply shortfall: IEEFA report

Extending the life of ageing coal power plants in Australia could lead to increased risks of power supply shortfalls, according to a report from the Institute for Energy Economics and Financial Analysis (IEEFA).

The report, titled 'Delaying coal power exits: A risk we can’t afford', examines the implications of relying on deteriorating coal-fired power stations for the country's energy needs.

IEEFA's lead analyst for Australian Electricity Johanna Bowyer has analysed the historical availability of coal-fired power stations nearing retirement. Her findings indicate that as these plants age, their reliability diminishes, posing a threat to the country's power supply.

Bowyer said: “Since 2000, 13 coal-fired power stations have closed in the NEM [National Electricity Market], totalling 6GW of capacity. Their average age upon closure was 42 years.

“The average availability of these power stations in the ten years before they retired was quite poor, at 66% on average. That means that on average, 34% of a plant’s capacity was unable to produce power.”

The report also outlines other risks associated with extending the use of ageing coal power plants, including safety concerns and the financial viability of refurbishments.

Bowyer points out that historical refurbishment costs have varied between A$400m ($254m) and A$1.3bn, with some projects abandoned due to economic inferiority compared to other supply-securing options.

Furthermore, operators have faced challenges with refurbishment projects, such as technical issues, schedule delays, and cost overruns. For instance, the Muja AB plant experienced low utilisation even after upgrades.

The report also sheds light on serious safety incidents at Australia's ageing coal power facilities, including fires at Hazelwood, Yallourn, Morwell and Northern, and explosions.

Tristan Edis from Green Energy Markets, co-author of the report, emphasises the consequences of low coal reliability that could lead to electricity supply shortages.

The report projects that to cover potential shortfalls, an additional 49 to 93 petajoules (PJ) of gas could be required annually from 2034 to 2043, which would likely lead to major power price spikes.

Edis said: “This is a large amount of additional gas, considering the average amount of gas used for electricity generation over the past five years was 122PJ per year. This additional gas requirement would have serious consequences for the price and availability of gas for other consumers.”

Bowyer concluded that instead of attempting to postpone the phase-out of coal, the focus should be on expediting the deployment of replacement capacity through renewable energy and battery energy storage.