EnergyAustralia has announced shelving plans for construction of a 1000MW gas fired power station in the Latrobe Valley at it's Yallourn site saying that low wholesale energy prices and reduced electricity demand did not make the project viable. EnergyAustralia is a division of Hong Kong-based utility CLP Holdings Ltd.
EnergyAustralia's group executive manager, energy markets, Mark Collette, as reported in the Age, said that suppressed wholesale electricity prices and continued falling demand for energy had led to the decision. Proliferation of rooftop solar panels and energy-saving efforts by households and business were also contributing to reduced energy demand.
''We have therefore decided to put the development on hold until market conditions improve,'' Mr Collette said. ''We are seeing further deterioration in the energy market and wholesale prices, and we don't expect conditions to improve in the foreseeable future. It was not financially sustainable to continue through the permitting stage when a new power station may not be necessary until much later this decade. We will continue to monitor the market and if there are significant improvements we will review this decision.'' he said according to the Age report.
In Australia's east coast interconnect wholesale power grid demand for electricity has been falling since late 2010.
In October 2012 EnergyAustralia announced the mothballing of one of four generators at the brown coal fired Yallourn Power Station. Certainly that decision was made easier by the implementation of the carbon tax and the flooding of the Yallourn coal mine in June and still continuing 6 months later, which has substantially hindered coal production.
Last October AGL Energy Ltd also suspended indefinitely plans to build the similar sized Dalton gas fired power station in New South Wales.
Traditional coal fired power generators are feeling the pressure of the Federal Governments Renewable Energy Target (RET) driving construction of wind farms, the Carbon Tax increasing the cost of coal fired power, as well as energy efficiency programs and drop in electricity demand from consumers. Retail electricity prices have spiked mainly as a result of increased investment in transmission infrastructure, but it is driving a reduction in residential demand. The high Australian dollar has also been cited as a reason for the continued depression of Manufacturing demand for power.
At the recent review of the Federal Government Renewable Energy Target (RET) traditional power generators such as EnergyAustralia and Origin Energy lobbied hard for a major overhaul and reduction of the target and said that Failure to redesign RET a missed opportunity. Ex- Reserve Bank Governor Bernie Fraser as head of the Climate Change Authority announced the continued RET with little change on December 19, 2012 which will now go to Climate Change Minister Greg Combet.
The Environmental and clean energy sector welcomed the review results. Clean Energy Council Deputy Chief Executive Kane Thornton said "Every review of this policy to date has found that the Renewable Energy Target is the most efficient, cost-effective and proven way to deliver more clean energy for Australia. It is no surprise that this has been confirmed again by the Climate Change Authority."
"The Renewable Energy Target is already a major economic driver, with leading consultancy SKM MMA projecting it will unlock more than $35 billion in investment over the life of the policy if it is left to work as designed." said Thornton in a media release.
A PriceWaterhouseCoopers (PWC) UK report on global carbon emissions reduction released in November 2012 warned that companies needed to take into account climate risks much more, that business as usual is no longer an option "More carbon intensive sectors need to anticipate more invasive regulation and the possibility of stranded assets." said the report.
Retail power companies are increasingly under scrutiny for their energy investment strategies, In November activists and shareholders held Origin Energy to account over anti-renewables stance.
Climate science says we need to shift to renewables to reduce carbon emissions this decade, the critical decade if we are to avoid catastrophic global warming impacts. But already we are experiencing the systematic climate impact on Extreme weather events.
According to the Australian Energy Market Operator (AEMO), two coal fired power stations have been retired in the last 12 months: the 420MW Swanbank B power Station (SE Qld) in May 2012 and the Northern Queensland based Collinsville 192MW coal fired power station in December. Two wind farm projects are due to start producing electricity in the next year: the 420MW Macarthur wind farm (Victoria) sometime during this summer and the 168MW Musselroe wind farm (Tas) during inter 2013.
Sources
- Tom Arup, The Age, 27 December 2012 - Gas-fired power plant put on hold
- Clean Energy Council media release 19 December 2012 - Climate Change Authority report gives fresh energy to renewables
- Australian Energy Market Operator (AEMO), 27 December 2012 - EAAP Report Update December 2012 (PDF)
