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King Coal To Rule For 20 More Years, Says Australia’s Energy Market Operator

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The Australian

The nation’s independent energy market operator has called for Australia’s fleet of coal-fired power plants to be operated for as long as possible to prevent a future price shock in the transition to renewables, claiming the ageing plants will still deliver the cheapest electricity for the next 20 years.

In a report commissioned by COAG into the energy and transmission requirements for the country, the Australian Energy Market Operator estimates the replacement cost of the generation capacity of the existing coal-fired network would be between $8 billion and $27bn by the mid-2030s.

It said extending the operation of the existing fleet of coal-fired generators for as long as the plants were economically viable would be “the least-cost option” for an orderly transition to renewables.

The report, while not advocating new coal generation, will have implications for the political battle between the government and energy giant AGL over the planned December 2022 closure of the Liddell power station in NSW, which the government argues could remain operational beyond that date.

It is the second independent report in a week to also back the Turnbull government’s national energy guarantee and a technology-neutral approach to addressing the energy supply and pricing crisis. But it contains an implicit warning that the system could not afford another premature coal-fired plant closure like Hazelwood in Victoria.

The AEMO report, to be released today by chief executive Audrey Zibelman, follows a report by the Australian Competition & Consumer Commission, which recommended the complete overhaul of the national energy market and suggested government underwrite new investments in generation, as well as setting a benchmark price for electricity. The report follows a cooling of tensions within the Coalition party room over the government’s energy policy with a partial backdown last week by the Nationals on their push for a new coal-fired power plant.

Resources Minister and coal advocate Matt Canavan said they were not wedded to a new coal plant but coal-fired power still needed to be contained in the NEG.

Some pro-coal Liberal MPs, however, are likely to seize on the report’s findings as a vindication of their push within the party room to invest in clean-coal-fired power as part of the energy mix into the future.

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