The Greens get an F in maths for Hazelwood shut-down

'Let's shut down the dirty Hazelwood and Anglesea coal power stations!' may sound great at an environmental activist rally but it shows an astounding lack of understanding of the power market. It's the best thing that could ever happen for other polluting coal generators.

The Greens announced yesterday that if they were to obtain the balance of power in the upcoming Victorian Election they would seek to force the closure of the highly emissions-intensive Hazelwood and Anglesea power stations. They say this could be done without compensating the existing owners, through the government simply removing their generating licenses.

It makes for a great rallying cry, a highly tangible move to reduce emissions. You can see a group of green activists throwing their fists in the air and cheering the Greens at such a declaration.

Pity it’s actually more like a lifeline to a bunch of other highly polluting coal power stations. 

The thing is that when Hazelwood and Anglesea are shut down it’s not like the electricity demand they used to satisfy will magically disappear once they’re gone. Something else has to replace it. 

Unless the Greens also secure a significant expansion in the Victorian Energy Efficiency Target, or some kind of additional renewable energy supply beyond the existing Renewable Energy Target (something omitted in their coal closure policy statement), then the reality is shutting down Hazelwood and Anglesea power station will be the best thing that ever happened for the remaining coal generators in the NEM.

Here’s the maths.

Hazelwood and Anglesea power station over the last few years have generated on average about 13,000 gigawatt-hours (GWh) per year.

Meanwhile in the last few years the generators that have copped the brunt of the pain from the expansion of renewable energy and decline in electricity demand have been the South Australian and NSW coal generators. All of these generators via the grid interconnectors, compete against Victoria’s brown coal generators, who tend to squeeze them out of baseload operation.

Origin Energy’s Eraring coal power station could pick up almost all the slack from the closure Hazelwood and Anglesea power station all by itself. Last year it ran at 45% utilisation, but if it picked up its utilisation to 85% (similar to Victorian brown coal generators) then it could generate an additional 10,000GWh per year. Eraring has an emissions intensity of nearly 1 tonne of CO2 per megawatt-hour, so that’s better than Hazelwood (1.5 tonnes CO2) and Anglesea (1.2 tonnes CO2).  But it’s still twice as polluting as the average emissions across the developed world’s power supply. So Eraring replacing Hazelwood and Anglesea isn’t much of a breakthrough for lowering our carbon emissions.

AGL’s Liddell power station (1.1 tonnes CO2 per MWh), if it were to return to levels of availability it achieved prior to 2009, could generate at 80% utilisation compared to the 50% it’s realised over the last few years. This could add another 5000GWh on top of Eraring’s 10,000GWh and we’ve now comfortably exceeded the 13,000GWh of generation lost from Hazelwood and Anglesea.

But there’s still plenty of underutilised, high polluting coal capacity left.

Loy Yang A (1.2tCO2/MWh) only managed 75% utilisation last year. If it just returned to levels of generation from the preceding five years, this could fill the gap left by Anglesea nearly two times over. Northern in SA could do about the same. And there’s still more underutilised coal capacity left in other power stations.

The Greens would do a far better service to the environment and to the economy if they made a major expansion of the Victorian Energy Efficiency Target the primary condition of their support for a Labor Government in any balance of power negotiations.  

This would reduce emissions far more effectively while having a less damaging impact on perceptions of Victorian investor risk. It would also act to lower electricity prices rather than increasing them as a Hazelwood-Anglesea shut down would do. It would stimulate employment while providing a net benefit to the economy because energy savings would outweigh the additional capital cost of the energy efficient equipment. And at the same time it would make life harder for all coal generators across the NEM, not just two.

Lastly, such a demand probably has a better chance of obtaining Labor agreement than closing an asset worth hundreds of millions of dollars to its owner without compensation.

So shutting down Hazelwood and Anglesea may be great for symbolism, but if this is the key ask from the Greens in negotiating their support for a future Victorian Labor Government, then it would be an opportunity wasted.