News
09/05/25
Australian firms flag coal phase-out timeline concerns
Australian firms flag coal phase-out timeline concerns
Sydney, 9 May (Argus) — Energy utilities raised concerns that Australia's
coal-fired power generation phase-out might be running on an unrealistic
timeline, according to submissions to the National Electricity Market (NEM)
review consultation process. Utilities AGL Energy, Alinta Energy, Delta Energy,
Energy Australia, Origin Energy and Stanwell — which operate 10 of the 20
coal-fired power plants in Australia (see table) — submitted separate
recommendations to the consultation launched late last year looking at wholesale
market settings. This came after the conclusion of the Capacity Investment
Scheme (CIS) tenders in 2027, and as Australia transitions to more renewables
from its aging coal-fired plants. The Australian Energy Market Operator (Aemo)
forecast the country will exit all coal-fired generation by 2038 in its
Integrated System Plan (ISP) published in 2024. But Delta Energy predicts that
this timeline will not be met, and views ISP's priority as emissions reduction
targets rather than a realistic timeline. Insufficient capacity to replace the
coal plants was a common issue flagged by these companies, with AGL saying this
is partly because of uncertainty in the market leading to less investments. The
utility plans to close all its coal plants by the end of June 2035. AGL was
Australia's largest emitter of greenhouse gas emissions in the 2024 financial
year, according to the Clean Energy Regulator (CER), followed by Stanwell,
Energy Australia and Origin Energy. The transition could be supported using
flexible dispatchable resources, according to Origin Energy. The coal phase-out
means more variable renewable energy (VRE) is required, but VRE output will not
necessarily match demand. "The NEM review must also consider the actions to
facilitate the planned retirement of coal-fired power stations from the energy
system, which will still be occurring in the NEM beyond the CIS," Stanwell
warned. "The urgency of developing solutions cannot be overstated, as any
indecision now would result in increased government intervention later, and a
disorderly and costly NEM beyond the CIS." Gas-fired generation A few firms view
gas-powered generation as critical in the transition away from thermal coal and
in maintaining system reliability. It will provide back-up in times of renewable
droughts, said Stanwell and AGL, and should be noted in discussions of the
forward strategy. But Alinta Energy is cautious of the costs of gas-fired power
plants, believing them to be the least costly for customers but not economically
viable because of their exposure to global gas market prices. Alinta's
suggestion is to reduce the market's dependence on high-cost facilities
including gas-fired facilities. Mixed views on capacity market Some companies
mentioned a capacity mechanism as a solution. Coal-fired facilities should be
allowed to continue until they can be replaced, said Alinta Energy, and gas
power plants are necessary. Energy Australia and Delta are calling for the NEM
to stay technologically neutral in this process, keeping thermal coal exits in
mind. A capacity market needs to be sustainable without government subsidies,
Alinta Energy said, and exit strategies for government intervention should be
clear from the beginning. But capacity markets can lead to higher costs for
customers, according to AGL, because of potential over-procured capacity. "If a
capacity mechanism was implemented, it would be important to consider the impact
of any capacity incentive on the operation of the NEM and the appropriate level
of the market price settings — a balance that may be difficult to strike," AGL
noted. The expert independent panel leading the review will continue carrying
out consultation, and is expected to make final recommendations to energy and
climate ministers in late 2025. By Susannah Cornford Australia coal fired power
plant closures in NEM Plant Capacity (MW) Owner Closure date State Emissions CER
2023/24 year Scope 1 & 2 of CO2e Eraring 2,880.0 Origin 2025 NSW 13,550,220.0
Yallourn 1,480.0 Energy australia 2029 Vic 10,502,080.0 Callide B 700.0 CS
Energy 2029 Qld 4,028,161.0 Total by 2030 5,060.0 28,080,461.0 Coal plant
closures in NEM after 2030 Bayswater 2,640.0 AGL 2030-33 NSW 13,712,719.0 Vales
Point 1,320.0 Delta 2033 NSW 7,111,963.0 Stanwell 1,460.0 stanwell 2035 Qld
6,982,204.0 Tarong 1,843.0 Stanwell 2035 Qld 10,936,021.0 Kogan 740.0 CS Energy
2035 Qld 4,522,472.0 Callide C 825.0 CS Energy 2035 Qld 688,038.0 Loy Yang A
2,210.0 AGL 2035 Vic 18,723,707.0 Sub-total 11,038.0 62,677,124.0 Total by 2030
16,098.0 90,757,585.0 CER Send comments and request more information at
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