Economic reality has a way of cutting through politics. Even when it comes to the acrimonious debate over climate change. That was certainly the case with the early closure of the Yallourn coal-fired power plant. For all the threats the Morrison government has directed at power companies to deter them from shutting down coal-powered plants, the financial bottom line was always going to speak with a louder voice.
Baseload electricity prices in Victoria have crashed 70 per cent from about $80 a megawatt-hour in March 2020 to $24 this month, putting most coal-fired plants into the red. The price drop has been driven largely by the pandemic-led downturn in energy demand, a cooler-than-usual summer and the accelerating rollout of wind and solar farms and rooftop solar panels.
EnergyAustralia will close the Yallourn power station in Victoria’s Latrobe Valley in mid-2028.Credit:Joe Armao
It is an industry in the midst of the biggest transition in generations. While coal and gas-fired generation remain the dominant source of the state’s energy supply, the move to renewables is only picking up speed. Victoria’s energy regulator is dealing with a 300 per cent increase in applications from renewable energy developers over the past four years.
Along with the declining cost of producing renewable energy, much of the new investment is being driven by the Andrews government, which has legislated a target for the state to reach 50 per cent renewable energy by 2030. The government has also committed more than half a billion dollars to fund six new renewable energy zones and fast-track new projects.
The same forces are also driving change in NSW under a Liberal-National Coalition government. So much for climate responsibility being a policy exclusively of the left.
But that bipartisan approach appears not to extend to Canberra. Federal Energy Minister Angus Taylor was quick to lambast the announcement by EnergyAustralia, warning of possible price hikes and blackouts as a result of the Yallourn closure. With the shutdown not taking effect for seven years, it would seem an early call, and one that fails to give much credence to the possibility that a workable solution could be found to keep the lights on.
This is not to say that the road ahead to a clean energy future can be left to new technology and market forces. As baseload power stations shut their doors, providing reliable power seven days a week, 24 hours a day is going to happen only if all levels of government play a role in ensuring market forces are steered in the right direction.
The building of large-scale battery storage will certainly play a role, but with only marginal private-sector investment in gas-fired peaking power that can operate flexibly to back up renewables, there is still far more policy work needed to ensure the right mix in energy sources is landed on.
That has not been helped by almost policy paralysis from the Coalition, and Labor trying to land a new position on climate policy after it felt the wrath of voters in coal mining towns at the last election.
There is much work to be done in the coming seven years. Not just to ensure a smooth transition towards the closure of Yallourn, but also for the 500 workers at the plant who were told this week that their jobs have a use-by date. They must be assured that there is a working life for them after coal. There are nearly 20 coal-fired power plants still running in Australia and for many of them, the clock is ticking ever louder.
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