Early closures are now a reality, with Energy Australia’s announcement that they will close one of Victoria’s largest Power Stations four years earlier than planned. This is due to the impact of cheap renewable generation such as wind and solar, which reduces the company’s profitability.

Edge have held the view that early retirements would occur earlier than expected. This contrasts with the data published by AEMO that uses the engineering life of a power station to forecast plant closures, rather than the economic life of the power stations.

Edge have had this view for the last couple of years. It is exciting seeing our forecasts turning into reality!

Although the announcement of Yallourn’s closure is the first, it will not be the last.  Edge is forecasting early closures of coal fired power stations in Queensland and New South Wales.

To facilitate the early closure, Energy Australia approached the Victorian Government with a plan to retire Yallourn Power Station and transition to cleaner energy. The plan incudes a $10M package to support the workforce. Energy Australia have committed to building a 350MW battery capable of supplying power for 4 hours. The battery will be the largest in the world and is expected to be in service by 2026.

Energy Australia’s plan is to be carbon neutral by 2050 however, Yallourn currently accounts for 60% of the company’s emissions. Shutting down the power station will vastly improve the companies carbon footprint.

Yallourn Power Station currently supplies about 20% of Victoria’s power. The need to transition to more intermittent generation in the region, required a firming solution to be enabled.  This resulted in Energy Australia committing to the high-capacity battery. This battery will allow more renewable generation to be built and the renewable energy can be stored by the battery for use when required. This will eliminate the spill into the grid, which results in very low prices during daylight hours.

Energy Australia is owned by CLP Group, an electricity company in Hong Kong.  They have been vocal about the impact cheap renewables are having on the profitability of the company and how the current generation mix impacts its emissions targets.

With the closure of Yallourn, Victoria will still have over 3,000MW of coal fired generation across the two remaining power stations, Loy Y and A and B.

As the transition to cleaner energy gains momentum, Edge expects to see more announcements like this in the not-too-distant future.