Does coal have a future in Australia?

With the recent release of the Climate Change Authority ‘Caps and Targets Review’ issues paper, which aims to identify appropriate emissions reduction goals for Australia, it is worth exploring the possible transition pathways that could eventuate in the electricity sector. In particular, it is clear that there will be some difficult conversations ahead on the future of our many coal-fired generation assets. 

While it will be sensible for some coal-fired generators to retire, for the newest and most efficient coal-fired generators it could make sense to invest in hybridisation with renewable generation. It is foreseeable that through a combination of biomass co‑firing and solar thermal boosting, these power stations could ultimately use coal only as a supplementary fuel, with renewables becoming their primary source of energy. 

The economics of these power stations could be further improved by utilisation of their waste products (such as heat and carbon dioxide) and by encouraging non-energy uses of their associated infrastructure (such as in-feed lakes). Furthermore, those coal-fired generators with capabilities for flexible operation (such as fast ramping rates) have an important role to play in the electricity market in supporting the operation of variable renewable generation, and will find increasing rewards for doing so in the ancillary services market.

The future of coal-fired generators

Undoubtedly, it will be sensible to retire some of the oldest and most emissions intensive coal-fired generators. If there are concerns about energy security, particularly given the present uncertainty over demand projections, the units could remain intact and available following a recall period (behaviour we are already seeing from Playford B and Morwell power stations). The political dynamics around the retirement of coal-fired generators will require steadfastness from governments, allowing efficient market pressures to take effect as these uncompetitive assets are undercut by lower emissions technologies. 

For other assets, it may make more sense to shut down some generating units for most of the year, and return to service during the summer months when demands (and prices) are highest. We are already seeing this kind of behaviour at Northern Power Station (in South Australia) and Wallerawang Power Station in NSW. This is an efficient market response that we could expect to be rational and appropriate for an increasing number of assets over time.

The newest and most efficient coal-fired power stations are another matter. These power stations have significant remaining technical life, and are likely to underpin our power system for some time to come as we progress along the transition to lower emissions. There is significant scope for the owners of these assets to be a major part of driving this transition, taking advantage of new opportunities and proactively becoming the source of significant abatement and technology demonstration.

There are four main areas of opportunity that will emerge over the coming years.

Hybridisation with renewables

Hybridisation of existing coal-fired assets could be a significant source of low cost renewable energy. 

Solar thermal pre-heating of power station water reduces coal consumption, thereby reducing greenhouse emissions. This could be a low cost way of increasing solar thermal penetration in the market, demonstrating the technology and reducing solar thermal costs.

Kogan Creek Power Station (in Queensland) is already installing a 44MW solar thermal boost, and Liddell Power Station (in New South Wales) already includes a 10MW solar thermal boost.  Institutions such as the Australian Renewable Energy Agency and the Clean Energy Finance Corporation should be promoting and supporting the uptake of this technology at most of the newer and more efficient coal-fired power stations across Australia.

There are also significant opportunities for biomass co-firing. A wide range of biological materials can be burned in coal-fired power stations (mixed with coal) to reduce coal consumption, thereby reducing greenhouse emissions. Most coal-fired power stations are surrounded by a large ‘buffer zone’, which could allow biomass crops to be grown in the area immediately around the power station, reducing transport costs and avoiding competition with food crops. 

Delta Electricity, with the Crucible Group, has been successfully trialling an innovative biomass pyrolysis process at Vales Point Power Station (in NSW) since 2010. The process produces biochar, which can be co-fired with coal to produce renewable energy or added to soil to improve fertility and agricultural productivity, as well as biogas, which also can be used for electricity generation.

Furthermore, most coal-fired power stations have large ‘ash dams’ nearby, which are used to store the waste ash from the power station. There is usually a wet lake component to the ash dam, which could be used for intensive growth of algae as a biomass fuel. The dry component of the ash dam could be used for growing grasses and other suitable biomass crops. This would also assist with managing dust, and make use of space that is otherwise unutilised.

With the recent reduction in the costs of photovoltaics, it may even make sense for some coal-fired power stations to install photovoltaic arrays in the surrounding buffer zone. This could make effective use of the available space in close proximity to strong grid connections, and where appropriate using the existing electrical equipment, reducing costs.

By applying some combination of these technologies it is foreseeable that coal-fired power stations could ultimately use coal only as a supplementary fuel, rather than as their primary source of energy. These will be the power stations that have a long economic life, remaining competitive over time as they lead the transition to a low emissions future.

Utilisation of Waste Products

The second area of opportunity for coal-fired power stations is in better utilisation of their waste products.   

Many power stations already provide some of their waste ash for use in the concrete industry, construction of roads and in mining backfill.

The heat produced by power stations could be used for town heating (where the proximity makes this viable), industrial processes (where low grade heat will suffice), and potentially even supporting intensive horticulture by heating greenhouses. Many power stations are located close to major infrastructure such as train lines, simplifying export of produce.

The carbon dioxide produced by power stations can also be used.  The stack emissions could be directly bubbled through the ash dam to stimulate the rapid growth of algae (for use as biomass fuel). Or, where profitable, the stack emissions could be carefully scrubbed and fed into the local greenhouses to increase horticultural productivity. These applications do not qualify as carbon sequestration (because the greenhouse emissions are still ultimately released into the environment), but they do extract more value from a waste product that would be emitted anyway.

Non-energy uses

The third area of opportunity is in exploring the use of the infrastructure at coal-fired generators for a range of non-energy uses.

Many power stations source their water from carefully managed in-feed lakes. These lakes can be used for aquaculture (such as trout farming), and will benefit from the security of those resources against drought. The in-feed lakes may also prove appropriate for enhanced recreational value in some locations, and could be developed into a tourist attraction. This could support the development of rich biodiversity reserves in the generous ‘buffer zone’ areas around power stations.

Supporting variable renewables

Finally, with increasing market penetration of wind and solar photovoltaics, there will be a growing need for management of variability in the electricity market. This will create a growing demand for flexible generators with fast ramping rates and low minimum loads. Some coal-fired assets will be able to efficiently offer these services to the market already, while others could with some upgrades. As the service becomes more valuable over time, we expect to see prices in the Ancillary Services markets rising, rewarding generators who offer it.

We are also likely to see growing rewards for generators that can offer voltage management services: providing reactive power on demand, and perhaps over the longer term operating as synchronous condensers (offering reactive power and inertia without producing electricity).

Thus, coal-fired assets can play an important role in supporting the entry of variable renewables into the market.

Future proofing rural communities

There are economic and community benefits in proactively pursuing these initiatives. The associated development can assist in ‘future proofing’ rural communities, providing local employment in tourism, aquaculture and horticulture and in managing and maintaining the hybrid power stations. This will become increasingly important in remote areas where mines and power stations are closing down.

So in the conversation about the future of our coal-fired assets, let’s remember that ‘coals ain’t coals’. Every asset will have an appropriate role.  For some this will mean retirement, for others it will mean shifting to a peaking role, and for others it will mean further investment so that they can proactively drive the transition. 

Thus, the owners and operators of coal-fired assets have a significant role to play, and the conversation needs to shift away from protection of the status quo and on to how they can lead and benefit from the transformation. Hopefully the Climate Change Authority can promote thinking of this nature in their development of the Caps and Targets Review.

Dr Jenny Riesz  is Principal Energy Market Analyst with Riesz Consulting, and a researcher with the Centre for Energy and Environmental Markets at the University of NSW. Bryan Beudeker is the Environment Manager at Delta Electricity.  The views expressed here are their own, and not those of their respective organisations.