AGL rightly ignores Turnbull

By December 10, 2017Australian Politics

Earlier this year, Prime Minister Malcolm Turnbull had discussions with the owner of Liddell coal-fired Power Station, AGL, in an attempt to keep it open for at least another 5 years beyond its 50-year life cycle1. The Turnbull government and the grey eminence of the Institute of Public Affairs are both indebted to the fossil fuel industry for their huge direct or indirect political donations, and it shows. However, AGL, as a business, have a responsibility to their shareholders and have realised that “Keeping old coal plants open won’t deliver the reliable, affordable energy our customers need” Indeed, AGL have announced that they are “getting out of coal”. This is a rational approach given that coal production is in dramatic decline around the world, with China burning less coal than it has since 2011, and coal usage dropping in the US to a point last seen in the 1970s2.

Now that the Turnbull discussions with AGL have faded from memory, the company has announced plans for the coal-fired Liddell Power Station beyond its scheduled retirement date of 20221.

Their preferred option3 is to close Liddell in 2022 as they had stated, and replacing with a series of investments in new low emissions generation coupled with upgrades to existing generation. They will include two wind generation projects totalling about 650MW, other renewables, an upgrade to Bayswater coal-fired power station to increase its efficiency, and gas peakers (gas-fired power plants that only run at times of peak demand) as well as a synchronous condenser (this helps to stabilise the power system during rapid load fluctuations4) at Liddell3. They also plan to install a 250MW battery at Liddell, and investigate the feasibility of pumped hydro1. This they estimate will require a total capital investment of $1,360 million, have an asset life of 15 to 30 years and to produce energy at an average of $83 per Megawatt hour3.

The Turnbull ‘plan’ would extend the life of Liddell Power Station for another 5 years to deliver 1,000 Megawatts peak capacity, but at reduced availability. AGL have estimated that it would require approximately $920 million in capital investment, have an asset life of 5 years, and would produce energy at an average of $106 per Megawatt hour. Unsurprisingly, this is not AGL’s preferred option.

If the right wing of the Liberal Party and the National Party, who are all beholden to fossil fuel companies and their supporters, let this slip, then AGL will most likely proceed with their preferred option. However, if the right tighten their squirrel grip by which they hold Turnbull, then expect to see taxpayer dollars thrown at Liddell, either by forcing AGL to keep it open, thereby providing a windfall for AGL shareholders, or by forcing them to sell it and subsidising its purchase by someone else and subsidising its upgrade. This will not be a few hundred thousand taxpayer dollars, but hundreds of millions.




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