Coal fired plants could go on producing energy for more than 20 years, states a new report by the Australian Energy Market Operator (AEMO).
Existing coal generators should be allowed to live out their lives to ensure an affordable and reliable electricity supply, AEMO’s ‘Integrated System Plan’ report recommends.
Welcoming the report, Energy Minister Josh Frydenberg told ABC’s RN it was a “warning shot” that coal needs to stay in the energy mix to keep prices down and supply up.
Renewables to replace coal over time
However, the report notes that new renewable energy sources should replace coal-fired generation as ageing coal plants retire.
Energy storage will also play a key role in future provision of renewable energy.
According to the report, demand for power from the grid is also falling. This is due to major growth in rooftop solar installations and more battery storage. Increased energy efficiency also plays its part.
Coal fired plants give way to energy storage
The transmission grid needs to support a range of new generation and energy storage options as thermal plants are decommissioned. This will ensure ongoing reliability and security of energy supply, the report claims.
AEMO modelling focuses on three main objectives over the next 20 years:
- Minimising total resource costs.
- Maximising value to customers.
- Ensuring a smooth transition from coal to renewable energies.
The final go-ahead for the Snowy Hydro 2.0 project is expected before the end of 2018. Tasmania’s Battery of the Nation initiative will also offer extra pumped hydro storage for use across the National Energy Market (NEM).
A second interconnector will then be needed to link Tasmania to the mainland NEM the report says.
Energy Minister plays it safe ahead of NEG talks
Frydenberg is still playing it safe ahead of the Council of Australian Government (COAG) meeting in three weeks. This is where states will give their verdict on the National Energy Guarantee (NEG).
The Coalition’s pro-coal lobby led by former PM Tony Abbott insists coal should be front and centre of the NEG. Yet the states want renewable energy to replace coal moving forward.
According to Frydenberg, Coalition members will be “pleased” with the AEMO suggestions because they ensure coal’s ongoing role in the NEG.
However, he appeared to rule out direct government intervention to keep coal-fired plants like Liddell in NSW open. He also avoided the issue of whether new coal stations should be built.
