Victoria’s Biggest Coal-Fired Generation to Close Its Doors 10 Years Early Amid Push for Green Energy

The Liddell coal-fired power station in the Hunter Vally of New South Wales, Australia. Taras Vyshnya/Adobe Stock

Victoria’s biggest power plant will be shut down by mid-2035 instead of the mid-2040s, up to a decade earlier than planned, as its owner transitions to renewable energy.

Energy giant AGL Energy said the early closure of its coal-fired generation Loy Yang A, which locates in Latrobe Valley in the Southeast of Melbourne, will avoid up to “200 million tonnes of greenhouse gases” compared to the previous closure date.

AGL’s incoming interim CEO Damien Nicks, on Thursday, noted that the move “represents a major step forward in Australia’s decarbonisation journey, supporting the transition to a lower carbon world aligned with the Paris Agreement goals.”

He also promised that AGL’s transition to renewable energy would be “simple, accessible and affordable” for its customers, the Daily Telegraph reported.

“We will work with our stakeholders to make sure this change is responsible, that our customers’ energy needs are met and that our workforce and communities are supported through this change,” he said in a statement at the stock exchange.

AGL Loy Yang, which comprises Loy Yang A and B stations, includes four 500+ megawatt turbo generators and produces over 2,200 megawatts of electricity, about 30 percent of the state’s total.

Victoria operates three coal-fired plants – Loy Yang A, Loy Yang B and Yallourn. Yallourn’s closure has been fast-tracked to 2028, with Alinta Energy-owned Loy Yang B expected to follow in 2047.

On Thursday, Victoria’s Energy Minister Lily D’Ambrosio said the closure will be “difficult for those who have powered Victoria through Loy Yang A for decades.”

“We will work with AGL to help locals restrain, reskill and find new work opportunities close to home as we transition the state to cheap, clean, renewable energy.”

“We’ve invested almost $2 billion to create more than 4,000 extra jobs in the Latrobe Valley’s workforce since 2014 – and in the coming months and years, our focus will be on helping Loy Yang A workers, their families and the Latrobe Valley community navigate the transition.”

The move comes after Australian iron ore billionaire Andrew Forrest announced a $9.2 billion plan to “eliminate” his mining empire’s “fossil fuel risk profile.”

How much will decarbonisation cost?

As energy companies ramp up their efforts to phase out fossil fuels, experts are still exploring how much the whole process would cost, how it will impact the labour market, the economy and fuel prices, and other environmental implications.

In August, the university partnership Net Zero Australia estimated the Australian government will need to invest over A$100 billion (US$68 billion) a year to successfully reach net-zero, with costs to substantially increase year on year until the slated target of 2050.

One factor behind the soaring cost is increasing demand globally for renewable energy manufacturing and equipment.

Meanwhile, Australia will also need to find 1 to 1.3 million new workers with the right technical skills across the north of the country. Australia’s current labour force is 13,558,400.

A UK study published in 2012 warned that the move to decarbonise could lead to fuel poverty, eventually resulting in high fuel prices. It also said that the increase of renewable energy technology such as solar panels would mean “moving energy generation into urban areas and hence potentially intensifying the urban heat island.”