Coal failure warning: Get the facts about energy this summer

The Australian Energy Market Operator has warned that due to more extreme weather such as bushfires and heatwaves, and the increasing unreliability of aging coal-fired power plants, there is a heightened risk of blackouts occurring this summer. Australia’s energy debate has been paralysed by ideology and misinformation for years -- make sure you get the facts.

Access this factsheet here by pdf

Victoria's brown coal fired power plants are the most unreliable in the country.

Aside from fuelling the climate crisis, Victoria’s aging coal and gas generators now threaten the reliability of the energy system.  Australia Institute analysed released in June 2019 revealed in the 18 months prior, 64 of the 183 breakdowns at coal plants across the country were in Victoria. The Loy Yang A coal plant in the Latrobe Valley failed more than any other generator in the country in that period, followed closely by the Yallourn coal plant nearby. 

Heading into summer, two serious fossil fuel breakdowns are impacting the reliability of the grid:

  • After a breakdown in May, 2019 a generating unit at the Loy Yang A coal plant is still undergoing repair. It has been offline for more than 200 days and counting. 
  • After the Mortlake gas plant suffered a major 'arcing' fault in July, the plant is operating at half-capacity as a generating unit undergoes repairs. It's not expected to be online until the end of December.

These coal failures have taken a total of 756 megawatts of generation capacity offline at a time when electricity demand is likely to be high.

A recent report by the Victorian Energy Policy Centre lists increasing unreliability of coal as the key threat to the state's energy system over the decade.

On 26th November, the CFMMEU’s Geoff Dyke issued a warning that Victoria’s coal plants can’t handle the heat, and believes that blackouts are certain. Dyke, who represents in workers in Victoria’s mining and energy division, singled out the Yallourn coal plant, saying "If we get a decent summer Yallourn [Power Station] is that unreliable it's not going to be able to stay on if we have four weeks of hot weather."

The problems with Victoria’s coal plants have been publicly acknowledged by the Premier of Victoria Dan Andrews, who said in The Age “We know that when you need power most our coal-fired power stations can be relied upon least...They have demonstrated that over recent times.”

The same coal and gas projects that are fueling the climate crisis can't handle the heat. If there are major blackouts during heatwaves this summer, failures at Victoria’s increasingly unreliable coal and gas plants will likely be to blame. If we're going to act on climate change and fix the grid, it's clear we need to shift to 21st renewable energy and storage.

What’s driving up power prices?

Australia’s privatised electricity market is complex. Prices are determined by the interaction of the wholesale generation market, distribution and retail sector. A 2019 report by the Victorian Energy Policy Centre found evidence that big power companies including AGL, Energy Australia and Origin have engaged in price gouging. Author of the research Dr Bruce Mountain said consumers “are paying roughly $200 more than they should and that’s ongoing.”

The federal government's failure to deliver a plan to see new renewable energy built to replace aging fossil fuels is also impacting electricity prices.

Wind and solar make the grid more resilient, drives down power prices

During heatwaves last summer, rooftop solar played a critical role, cutting demand on the grid on the hottest days when demand (and cost) spikes. For example, on New Years Eve last year, solar generated on people's rooftops slashed demand on the national electricity grid by 2,338 megawatts, helping drive down wholesale electricity prices. An earlier 2017 analysis by consulting firm Energy Synapse found rooftop solar saved nearly $1 billion on wholesale electricity prices during a 3-day heatwave in February of that year.

The good news: wind and solar power are now the cheapest forms of new generation.

This was confirmed in a report by the CSIRO and Australian Energy Market Operator (AEMO), and has been backed up by numerous studies by Bloomberg New Energy Finance and the International Renewable Energy Agency that costs continue to fall. The Australian Energy Market Commission predicts wholesale electricity prices will fall over the next three years as new renewable energy supply comes online.

Here in Victoria, the state renewable energy target is driving the rollout of wind and solar. The simple laws of supply and demand dictate that building new renewable energy supply puts downward pressure on wholesale electricity prices.

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