Origin Energy managing director Grant King said it is unlikely any more coal-fired power stations will be built in Australia, as the renewable energy target helps force coal power out of the market.
However, there still could be the need for more gas-fired power stations on a renewable-dominated grid to keep it reliable, particularly if coal-fired power comes off quickly.
“I don’t think there is going to be another coal-fired power station built in Australia,” Mr King said yesterday on the sidelines of the Australian Petroleum Production and Exploration Association conference in Brisbane.
“From a pure supply and demand perspective, with the amount of renewables that will be forced into the system, there’s hardly any cause for investment in generation, other than mandatory renewables probably, until the second half of the 2020s.”
He said by this time the community was unlikely to stomach more coal-fired power being built.
Further measures to close coal-fired power stations, such as government assistance, were not necessary, he said.
“The mandatory renewables target will force the retirement of coal – it degrades the economics of baseload generation for older plants,” Mr King said
“The driver already exists, and as to the question of whether there should be compensation, we would say no, Australia has had a renewable energy target for a long time.”
On gas-fired power, the picture was less clear cut. Mr King said it would be essential for maintaining reliability in an increasingly renewable-heavy power sector.
“There’s still quite a bit of unused gas capacity, whether more is needed depends on the rate at which coal gets withdrawn,” he said.
“We may need some more combined cycle gas (plants) in that time frame (to the late 2020s).”
Mr King said he did not think batteries would be able to provide the grid with the same storage or reliability in that time.
Illustrating Mr King’s point on gas power, rival AGL Energy yesterday announced it was reversing a decision to close part of its Torrens Island gas-fired power plant because coal-fired power station closures in the renewable-heavy South Australian market meant renewed demand.
“As a result of the recent retirement of other baseload generation assets in South Australia, market conditions have changed to the extent that there has been a significant tightening of supply to the market,” AGL operations manager Doug Jackson said.
“In deferring the mothballing of a station, AGL will continue to play a key role in maintaining South Australian security of energy supply,” Mr Jackson said.
Alinta has this year closed two coal-fired power stations in SA.
This article was written by Matt Chambers for The Australian.