AGL Energy will close its Liddell coal plant by 2022, and has outlined plans to build gas and renewable energy capacity to supplant the NSW power station’s 1,680MW of generation.
The $1.36 billion plan unveiled on December 9 dismisses Malcolm Turnbull’s desire for AGL to keep Liddell open beyond its prescribed retirement date in 2022, or to sell the plant to another operator who will.
Aurizon holds the contract to move coal by rail to Liddell, after recently winning it off Pacific National.
AGL says $920 million would need to be spent to extend Liddell’s life just five years, to 2027, and it would only operate at a reduced capacity of 1,000MW in that scenario, producing energy at $106 per MWh.
The company’s alternative plan would generate energy at $83 per MWh, from assets with a life of between 15 and 30 years, according to its estimates.
AGL also ruled out selling Liddell, saying the infrastructure it shares with the Bayswater power station would need to be duplicated if the assets were separated.
AGL’s plan includes an efficiency upgrade at Bayswater, and the construction of a synchronous condenser at the Liddell site, designed to stabilise the energy grid.
“This plan demonstrates that old power plants can be replaced with a mixture of new, cleaner technology, while improving reliability and affordability,” AGL chairman Graeme Hunt said.
“Decisions for the investments are staged to enable flexibility to respond to the changing needs of the market and improvements in technology over the next five years.”
AGL says it’s committed to zero forced redundancies when Liddell is closed in 2022. It also said its proposed portfolio to replace Liddell will shrink its carbon footprint by 17.6%.
The energy provider has refused to guarantee all the replacement capacity will be built within NSW, despite the State Government’s requests, but all assets in stage one of the plan are to be within the state.
Stage one, worth $490 million, includes a 250MW gas peaking plant in Newcastle, 453MW from the Coopers Gap Wind Farm, 200MW from the Silverton Wind Farm, 300MW in solar offtake, 100MW from the efficiency upgrade at Bayswater, and up to 20MW in demand response capacity.
Stage two includes a further 500MW gas peaking plant somewhere in NSW, along with 500MW in renewables and up to 50MW in demand response.
The third and final stage of the plan would see a 250MW battery built at Liddell, another 250MW in renewables and a further 30MW in demand response.
AGL said it will also consider the feasibility of pumped hydro assets in NSW in stages one and two of the program.
AGL said in September it was facing a “huge daily challenge” to keep Liddell operating, and would need to spend upwards of $150 million just to keep the plan running until 2022.
The 46-year-old plant has been running at reduced capacity to avoid shutting down, and its coal conveyor system and ash disposal system have been described as “highly compromised”.
“We’re dealing with a very, very old plant which has a multitude of technical problems,” AGL Macquarie general manager Kate Coates was quoted by Fairfax in September. “We are also struggling with getting coal up to our stations at the moment.”