An additional 850MW of dispatchable generation capacity will be required in New South Wales after the closure of the Liddell Power Station if AGL fails to follow through with its three-stage transition plan, according to the Australian Energy Market Operator (AEMO).
Last December, AGL confirmed it would retire the power station in 2022, leaving a gaping hole in the state’s energy market.
With a capacity of 1800MW, the power station supplies more than 10 per cent of NSW’s power.
The plan proposes a mix of high-efficiency gas peakers, renewables, battery storage and demand response as well as the efficiency upgrade at Bayswater Power Station.
“If all three stages of the AGL plan are completed, the resource gap will be eliminated,” the advice from AEMO said.
“A market approach that allows multiple other participants to compete to invest in a variety of resources that can address the reliability deficit to produce the best overall outcome for consumers.”
Federal Energy Minister Josh Frydenberg said the government asked AEMO to assess AGL’s plan.
“AEMO’s advice, released today, vindicates the government’s concern about Liddell’s closure and reinforces the need to ensure sufficient dispatchable power is in its place,” Mr Frydenberg said.
“While AGL says they are willing to undertake all three stages of their replacement plan, the 100MW Bayswater upgrade is, according to AEMO, the ‘only committed resource at this point in accordance with criteria AEMO applies for determining new supply’.
“Without the implementation of AGL’s full plan or equivalent investment by others, AEMO has concluded there will be an 850MW shortfall in dispatchable power and in their words ‘a high risk of load-shedding’ following the closure of Liddell.
“The existence of a major shortfall in dispatchable power following Liddell’s closure would clearly present an unacceptable situation undermining the stability of the system.”
In a statement, AGL said its NSW Generation Plan was already being implemented.
“The plan delivers dispatchable power by incorporating a mix of technologies in a market where the cost of renewable technology is falling and more flexible, peaking generation is required,” the company said in a statement.
“An independent assessment of AGL’s plan found the replacement generation is more affordable at $83/MWh, compared with extending Liddell at $106/MWh.
“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.
“The plan also aligns with the National Energy Guarantee, which AEMO has agreed will encourage competitive markets and produce the best outcome for consumers.”