Energy Boss Says More Coal Power Reserves Needed to Prevent Blackouts

The Yallourn coal-fired power station in the Latrobe Valley of Victoria, Australia, on April 28, 2022. Caden Pearson/The Epoch Times

The boss of one of Australia’s largest energy retailers has called on state governments to build up coal generation reserves to prevent energy shortfalls from the rapid net zero transition.

This comes after the Australian Energy Market Operator (AEMO) released a new 2024 roadmap predicting that all coal-fired power stations across the country could cease operation by 2038, five years ahead of the previous forecast.

While acknowledging the transition to renewable energy was occurring at “light speed,” EnergyAustralia’s Managing Director Mark Collette warned that consumers faced significant risks of blackout if there were not enough coal generation to back up the power grid, according to the Australian Financial Review.

The managing director expressed concerns about the scale of the energy transition required to meet Australia’s 2030 climate change targets.

“Government and corporate ambition is strong, policy is supportive, but challenges remain, including supply chain, social licence and workforce availability,” he said.

Mr. Collette also hoped that federal and state governments would come up with policies to support coal power reserves, as it was critical to ensuring economic growth.

“The timeline for coal exits highlights that getting the details right for the Commonwealth-state agreement on a strategic reserve for each state is essential,” he said.

This is not the first time that Mr. Collette has raised warnings about the risks of energy shortages to the power grid.

In late 2022, he urged Australian energy companies not to close down coal and gas power plants too early as the development of new renewable energy sources failed to catch up with the exit of those power stations.

Mr. Collette then suggested state governments and energy producers adopt a form of “closure contracts” to ensure that traditional power stations could only retire when there was sufficient generation capacity to replace them.

AEMO’s 2024 Roadmap

According to the roadmap, 90 percent of the coal-fired power plants in the National Electricity Market will retire before 2035.

The AEMO predicted that a total phase-out would be complete before 2038, with an even faster transition to be expected as energy companies aggressively moved away from coal power.

However, the roadmap pointed out that the public and private sectors would need to invest heavily in renewable energy sources to keep up with the demand of households and businesses.

Specifically, storage capacity needed to expand 20 times by 2050, while grid-scale wind and solar generation need to rise seven-fold.

Rooftop solar and other distributed solar capacity must also increase four-fold.

Apart from upgrades to existing networks, around 10,000 kilometres of new transmission lines need to be built by 2050 to connect renewable sources across the country to the power grid.

The investment costs for all generation, storage, firming, and transmission infrastructure under the plant was estimated to hit $121 billion (US$81 billion) a year.

A general view of the shut-down Hazelwood Power Station in Melbourne, Australia, on March 16, 2017. Robert Cianflone/Getty Images

Energy Shortages Looming on the Horizon

According to an AEMO report early this year, mainland states in the National Electricity Market (NEM) could experience electricity shortages as early as 2027 due to the rapid closure of coal generation.

The report stated that while at least five coal-fired power stations in the region would be shut down in the coming years, there were delays in many major renewable energy projects, posing risks to the power system.

“What we see toward the end of the decade is increasing reliability gaps, and those gaps hit every mainland state in the NEM,” AEMO CEO Daniel Westerman said.

The AEMO then warned that Australia urgently needed new projects to go online to ensure the power grid’s reliability over the next decade.

Despite the AEMO’s forecast, some Australian states are already struggling to meet their power demand.

On Dec. 14, the New South Wales (NSW) government issued a request to its residents urging them to “temporarily reduce non-essential use of electricity” to prevent blackouts from happening.

This came as hot temperatures of up to 40 degrees Celsius hit Australia’s most populous state, causing a surge in air conditioning use.

In September, the NSW government confirmed that it was negotiating with Origin Energy to extend the lifespan of the country’s largest coal-powered station, Eraring, beyond its 2025 closure date.

The state government was concerned that new renewable energy projects would not go online quickly enough to fill the gap left by the closure of the Liddell coal power plant in April, prompting the need to delay the shutdown of Eraring.