Speculation that the closure of the Liddell power plant in New South Wales would lead to major price increases was seriously flawed, because it ignored the development of replacement generation capacity, the energy industry said today.
The Australian Energy Council’s Matthew Warren said that the use of exaggerated claims rather than detailed modelling only served to cause unnecessary alarm. “This type of speculation fails to further the debate on the need for national energy policy to encourage investment in new generation.
“Comparing the closure of the Hazelwood brown-coal power station in Victoria to the proposed closure of the Liddell power station in New South Wales paints a deliberately misleading picture.
“The plants are not like-for-like. One was a baseload generator that operated effectively all the time because it was one of the lowest cost generators in Australia. Liddell in contrast operates much less frequently, so would not have the same impact on wholesale prices.
“At the same time there has been a lengthy notice given of the proposed closure of Liddell, which gives the energy market time to adjust and to introduce replacement generation and avoid the same impacts on wholesale prices.
“Claims that the closure would leave an 850MW gap is based on no replacement generation being built. The market operator has stated that replacement plant being proposed for Liddell would avoid that gap if it proceeds. There are likely to be other investors interested in building replacement plant.
“To achieve that and avoid major price rises as older plant closes requires bipartisan agreement on national energy policy, which is why the energy industry has supported the National Energy Guarantee.”
About the Australian Energy Council
The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.
The Australian Energy Council has welcomed the release of the Energy Security Board's options paper,which is the result of a substantial consultation process.
Send an email with your question or comment, and include your name and a short message and we'll get back to you shortly.