Will the private sector build a coal-fired power plant? No.
Taxpayer support or a dramatic policy shift would be required to convince investors to build a new coal-fired power station in Australia, experts say.
Technological improvements, entrenched renewable energy subsidies and so-called “carbon risk” have positioned renewables plus storage as the most competitive option for new generations.
According to analysis for the Minerals Council of Australia, a new 1000MW High Efficiency Low Emissions coal plant would cost about $2.2 billion.
But the Grattan Institute’s energy program director Tony Wood said the banks were reluctant to finance coal-fired plants, with 40-50 year life spans, due to expectations of tougher carbon emissions targets in the future.
But that won’t stop the Government. Here is its demand:
A letter inviting Coalition MPs to join the pro-coal Monash Forum calls for the government to invest in a $4 billion “Hazelwood 2.0” coal-fired power plant.
The letter details Sir John Monash’s history as head of the State Electricity Commission in Victoria after his time as a World War I military commander, and role in opening up the Latrobe Valley.
The authors say they are not opposed to renewable energy, provided it is economic, without grants or mandatory targets, and express dismay at the “government failure” in not building new coal-fired power plants.
“If it’s right for other countries to use our coal, how can it be wrong for us to do so?” Sky News has reported the letter as saying.
“If the government can intervene to build Snowy 2.0, why not intervene to build Hazelwood 2.0 on the site of the coal-fired power station in Victoria that’s now being dismantled?
They want a fully government funded coal plant but renewables are only OK without any subsidy. This is absurd. Aside from the debilitating ideological bias, it will take the better part of a decade to build a new coal-fired power plant, arriving long after renewable storage is much cheaper and the need for it is gone, and it will divide the nation. Paul Kelly sees it all clearly:
The idea that drives the latest core conservative revolt — a new coal-fired power station run by the government, if needed — is delusional and flawed at every point. It fails on policy, politics and consumer grounds. The conservatives are becoming coal power socialists. They are losing the plot.
This push is surely one of the most bizarre transitions on record. It cannot succeed. But the damage it can do is potentially huge. Smart Coalition backbenchers should keep their nerve and stand by the existing National Energy Guarantee policy endorsed last year by the cabinet and partyroom.
This episode exposes the nostalgic mindset that blinds the conservatives. They are locked into past dreams when they swept the country offering cheap power prices and repudiating Labor’s carbon tax. They refuse to admit the caravan has moved on.
…This is ideology before rationality. But this time the ideology is nationalisation, not free enterprise. Labor will mock the ideology and repudiate the policy. The conservative lobby doesn’t get it — an electoral contest in which coal is pitted against renewables is a losing contest for the conservatives.
If we’re going to nationalise some part of energy production then make it gas. Coal-fired power stations can be retro-fitted with combined-cycle gas turbines in a jiffy. All we need is cheaper gas to do it. So:
- install gas reservation that keeps 10% of east coast exports here;
- if prices don’t fall then fix them at $5Gj;
- gas sets the marginal cost of electricity in the National Electricity Market so power cost will also crash.
Why this is OK is equally straight forward:
- the east coast gas boom was a classic malinvestment bubble and the big gas companies that are shipping the east coast’s cheapest reserves to Asia at huge losses lied about having enough gas to fill their LNG plants;
- as such they have been buying up all of the third party gas on the east coast and driving up prices;
- by allowing them to do this we are bailing them out for misallocating capital;
- if we fix the price of gas they will have to bear the brunt of their bad decisions rather than passing them on to everyone else via local discriminatory pricing.
This solution to the gas market failure will crash Australian energy costs and put our decarbonisation program back on track as well. Cheaper gas can fulfill the role it was always planned to have displacing base load coal as renewable storage catches up.
Any other solution is, frankly, balderdash.
