Climate change: Australia’s coal fired power plants to close by 2035 as renewables brought in

The end of coal-fired power in Australia was essentially sealed this week with the country’s largest energy company and an entire state pledging to go “net zero” by 2035.

AGL Energy announced Thursday that it will shut down all of its coal-fired power plants, including the country’s largest polluter, Loy Yang A station in Victoria, a full decade before its scheduled 2045 shutdown.

The company’s announcement followed Queensland Prime Minister Anastacia Palaszczuk on Wednesday revealing that the Sunshine State would use 80 percent renewable energy within 15 years and not rely on coal.

But questions have been raised about whether the country’s power suppliers will be able to meet Australian household demand using only renewable energy and gas – the latter of which producers are currently shipping overseas for huge profits.

Cracks are already appearing in the country’s aging electricity grid as Australians are warned of expected shortages next winter if coal-fired power plants are taken offline.

Over the past winter, the threat of widespread power outages forced the Australian energy market operator to take control of generator power for the first time.

The crisis was fueled by nearly 25 percent of coal-fired power plants being shut down due to maintenance and outages, periods of low wind and solar power, and rising gas and coal prices following the Russian invasion of Ukraine.

These factors, combined with increased energy demand in winter, pushed the power grid to its limits.

AEMO temporarily suspended the spot market in NSW, Queensland, South Australia, Tasmania and Victoria – the states involved in the national electricity market – and ordered additional power plants to feed electricity into the system.

Major players in the Australian electricity market are struggling to adapt to changing consumer demand for green power and the tightened emissions reduction targets of the new federal Labor government.

Origin Australia will close its plant in Eraring, north of Sydney, by 2025 with the development of a large battery at the site and the expansion of renewable energy and storage capacity to 4 gigawatts by 2030.

Already a leader in the residential solar market, Origin has acquired the Yanco Solar Farm in the Riverina region of NSW as part of a push toward large-scale renewable energy generation.

His big brother AGL had planned to spin off the coal-fired portion of his business and run it as two separate businesses — the other a retail energy supplier — but that plan was thwarted by billionaire Mike Cannon-Brookes.

The rich-lister and software magnate had initially launched a takeover bid for AGL, but when that failed, he became a major shareholder and campaigned against the split.

And it looks like the climate activist won.

“This is one of the key decarbonisation initiatives in Australia,” said AGL Chair Patricia McKenzie of Thursday’s announcement.

Other plants to be closed include Liddell and Bayswater in NSW, although these will be decommissioned on schedule.

AGL plans to invest up to $20 billion in new renewable energy and energy storage assets by 2036.

In Queensland, Ms Palaszczuk said energy from renewable sources will make up 70 percent of Queensland’s power supply by 2032 and 80 percent by 2035, a significant increase from the state’s previous target of 50 percent by 2030.

Coal will be completely replaced by renewable energy sources such as wind, solar and hydropower by 2035, and the transition from public coal-fired power plants to ‘clean energy hubs’ will take place from 2027.

‘This plan is all about cheaper, cleaner and safer energy for the people of Queensland,’ said Ms Palaszczuk.

‘It’s about turbocharging new investments in new minerals, batteries and production.

‘Renewable energy is the cheapest form of new energy… This plan will make Queensland the renewable energy capital of the world.

The $62 billion plan includes a new pumping water project considered one of the largest in the world, including a new dam in the Pioneer Valley near Mackay that is expected to eventually supply half of Queensland’s total energy.

Combined with another dam, Borumba, the two hydroelectric plants would be larger than Snowy Mountains’ Hydroelectric scheme, Deputy Prime Minister Steven Miles said.

But experts worry whether Queensland’s sustainable plan will be enough to cover the loss of the coal-fired power plants – they warn that the proposed hydropower plants will only have 24 hours of storage compared to seven days for Snowy 2.0.

Tony Wood, director of the energy program at the Grattan Institute, applauded Queensland’s push for renewables, but warned the plan could fall short.

“It’s not just about how much electricity they produce immediately, but also how long they can work,” he said AF.

‘The two pumped water projects in Queensland have only 24 hours of storage. That won’t be enough, especially since Snowy 2.0 can run at full capacity for seven days.’

Dylan McConnell, of the University of Melbourne’s Climate and Energy College, told the AFR it was not a “like-for-like” swap.

‘Not by itself, but in combination with sun, wind and other sources you get close. But you have to think about the whole system working together,” he said.

Australians have already been warned of power shortages from mid-2023 as coal and gas plants are withdrawn from the national grid.

Ensuring factory closures do not affect homes and businesses will require massive investments in energy generation, storage and transmission over the next decade.

The Australian Energy Market Operator, in its latest report released last month, predicted significant problems in the interconnected electricity markets of NSW, Victorian, Queensland and South Australia.

“Gaps in forecasts have emerged in the NEM (National Electricity Market) regions due to significant shutdowns of coal and gas plants, along with insufficient commitments for new generation capacity needed to offset higher electricity consumption,” it said. AEMO CEO Daniel Westerman.

He pointed to Australia’s first cluster of The phasing out of coal generation that will take place in the next decade – a total of 8.3 gigawatts, equal to about 14 percent of the total capacity of the national electricity market.

“Without further investment, this will reduce the supply of generation and test the ability of the transmission network to meet reliability standards and the security needs of the electricity system.”

The report forecasts confidence shortfalls in South Australia in 2023-24 and Victoria from 2024-25 against what is known as the ‘interim confidence measure’, and in NSW from 2025-26 against the ‘confidence standard’.

Gaps are forecast in all states in the national electricity market for 2031-2032.

For next summer, AEMO says there are ‘supply risks’ in Eastern Australia.