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Killing Queensland coal?

By Geoff Carmody - posted Monday, 13 November 2017


Suppose, for efficiency, coal generators keep spinning 24/7. At best, they can recover costs from dispatch for half that time. If so, the hourly coal generator cost could increase up to $140 per mWh. Suppose instead coal generators are switched off every day when not dispatching power (a big operation, spinning up and spinning down every day). Any (small?) coal input cost savings must be set against the increased costs of much greater wear and tear and shorter operating life for the plant. Greater costs for grid stability maintenance must also be taken into account.

Allowing for the uncertain intermittency of renewable power, a prudent system-wide strategy, supporting coal plant efficiency, might be to keep coal generators spinning 24/7, even though dispatch is only for 12 hours on average.

This suggests two possibilities. First, dispatched base-load coal electricity could as much as double in price. Second, competition from other sources means coal plants can't recover costs and close. Either way costs.

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Well d'oh. RETs are intended to encourage new renewables and force closure of fossil fuel plant. AGL's reaction to subsidised renewables and penalties for fossil fuel plant (eg, Liddell) is rational. The closure of Hazelwood is too.

The Prime Minister shouldn't complain. He supports RETs, if less ambitious than the Palaszczuk caretaker government, SA, Victoria, and the ACT. All must accept such policies are scissors with two blades, not one.

They own these policies. Businesses respond rationally to them. If governments don't like the responses, change the policies.

Queensland's coal-fired generator fleet: what will remain?

Queensland has eight black coal-fired generators (in no particular order):

  • Stanwell (1,446.9 MW)
  • Callide B (700 MW)
  • Callide C (840 MW)
  • Gladstone (1,680 MW)
  • Kogan Creek (744 MW)
  • Tarong (1,415 MW)
  • Tarong North (450 MW)
  • Milmerran (852 MW)
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These have a total 'plate rated' output of 8,127.9 MW. Actual total output will be less, especially for older plant.

At present, very roughly, black coal averages around 80% or so of total electricity generation in Queensland.

The remaining 20% or so is split between gas and other fuels, and renewables (mainly small solar). Renewables might average about 5-6%.

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My apologies. In my previous opinion piece (Are renewables and batteries part of the power generation & storage solution?) on 9 November 2017, I promised a piece on 'poles and wires': the electricity transmission and distribution network. I hope to write that piece next time.



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About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

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