Coal plants closing faster than expected

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(The Conversation) The aim of the international climate summit in Glasgow is to “turn coal power into history”. Some of the major coal-consuming countries have agreed to phase out fossil fuels in the 2030s, but Australia is not among them.

As part of its recently released plan to reach a goal of no new emissions by 2050 and removing old emissions, the federal government has set out to create a scenario where the power sector is still dependent on coal in 2050 – but to a very limited level. till.

Despite the federal government’s insistence on keeping coal alive, states are trying to phase out coal. But a convoluted and state-by-state approach almost certainly has consequences for consumers paying a heavy price, if not a credible, sustainable climate and energy policy at the national level.

A recent Grattan Institute analysis finds that if coal use is managed well, we can have electricity at a lower cost and reduce emissions.

Coal economics not compatible with today’s framework

Australia exports more coal than it consumes. But we still have 25 gigawatts of coal-fired power plants, 23 of which produce electricity for the National Electricity Market (NEM). These coal-fired power plants are getting old – two-thirds of them are due to close by 2040.

Market conditions are making it difficult for these plants to remain profitable, as the use of renewable energy has increased in recent years. Rooftop solar plants have dramatically reduced off-grid electricity demand.

On days when there is plenty of sunshine and wind, wholesale electricity prices are regularly slashed so much that their prices go into the negative, thereby penalizing the generators that generate electricity at that time. .

What’s more, coal-fired power plants are less flexible than batteries, hydroelectric dams, and reactive gas-powered generators. This makes it difficult for coal plants to increase production when electricity prices are high, or reduce production when prices are low or negative.

The economics of coal-fired generators are not compatible with systems with lots of solar and wind-powered electricity.

Coal plants closing earlier than expected

Poor economics – with high maintenance costs and increased risk of technical failure – make it difficult to justify keeping aging coal plants running. So far, the closing date for three plants has come closer.

Rapid closure means that coal production capacity will decrease in future years. For example, the early closure of the Yalorn and Ering plants would reduce the expected coal production capacity by 1.5 GW in 2030. But at least six coal-fired plants in Australia will continue to operate after 2040 from the current program list of closures.

As the CSIRO said in July, this is inconsistent with Australia pursuing the Paris Agreement goal of limiting global temperature rise to 1.5 °C this century.

So what are state taxes actually doing?

There are economic as well as political reasons behind the closure of coal plants.

We need a strong, national policy

A Grattan Institute analysis shows that a mostly renewable system with no coal – and gas’s limited role – can maintain a reliable electricity supply while reducing emissions cheaply. Of course, there will be challenges to ensure an orderly exit from coal.

For example, unexpected shutdowns or shutdowns of coal plants can result in power supply cuts because investors in the electricity market do not have enough time to build new capacity.

A national policy to coordinate extraction from coal would reduce uncertainties for the power system.

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