Power Up: We Need to Talk About Coalkeeper

Widespread concerns that the Energy Security Board’s capacity mechanism proposal would just serve to keep ageing coal-fired plants running has reportedly led to the conclusion that more discussions are needed before a detailed design is developed.

Draft rules released in July, which call for power generators to be paid when they can guarantee the dispatch of power at specific times has led renewable energy players and some state governments to say the proposal is just an attempt to prolong the life of coal generators.

The so-called ‘Coalkeeper’ payments have been estimated by green energy think tank the Institute for Energy Economics and Financial Analysis (IEEFA) as costing consumers between $2.9 billion to $6.9 billion, or $182 to $430 per annum for each household.

It added in its report that the stated purpose of the payments to keep coal-fired power stations that were becoming financially unviable operating was unnecessary as the government’s actions meant that a range of controllable sources of power from hydro to batteries, bioenergy, gas and even some small coal power plant upgrades were already coming on line.

“From 2017 to 2027, almost 6,500 megawatts of dispatchable power project capacity will be added to the grid,” report co-author Tristan Edis noted.

“To put this into perspective, this is almost double the capacity that will be lost from the next three coal power stations due to close after 2027 – Yallourn, Callide B and Vales Point B.”

Additionally, independent advice about the proposal has been scathing, with FTI Consulting noting that capacity payments were akin to significant market interventions that would not only compromise market principles, but that there was no guarantee that the capacity procured would be deliverable to meet the requirements of the market system.

States such as New South Wales, Victoria and Queensland have all voiced their concerns about the scheme.

Thanks to all these points, the ESB will reportedly work with “stakeholders and jurisdictions” to develop the detailed design of a capacity mechanism.

Solar outstrips coal

The ESB’s reported move comes as for one brief glorious, sun-soaked moment, more than half of Australia’s electricity generation came from solar power, outstripping coal for the first time since the national energy market was set up 20 years ago.

For a few minutes over the weekend, low demand and sunny skies meant that solar power provided 9,427 megawatts of power compared to 9,315MW from coal.

However, University of Melbourne climate and energy college research fellow Dylan McConnell told The Guardian that Australia was still a long way from peak renewable energy.

He added that energy prices also went negative on Sunday, which hurts coal generators more than other providers as the costs associated with shutting down and restarting coal generators often mean that they choose to keep running even at a loss.

Energy analyst Simon Holmes à Court said more renewables could have gone into the network if the coal plants were more flexible and transmission was upgraded.

It also comes as the Australian Energy Market Operator noted that renewables could meet 100% of consumer demand at certain times of the day by 2025 if large-scale wind and solar development continues at the current rate.

Offshore oil and gas oversight

Meanwhile, Australia is moving to strengthen its offshore oil and gas regulatory framework by ensuring that companies have the financial resources and technical capability to operate and decommission safely.

The changes also enable the government to call on previous titleholders to pay for decommissioning and environmental remediation if they sell a title and the new titleholder is then unable to meet their financial obligations.

Minister for Resources and Water Keith Pitt said the laws ensure that taxpayers are not left to pick up the costs of future decommissioning work on offshore oil and gas projects.

“The trailing liability provisions will be an action of last resort when all other safeguards have been exhausted and will reduce the risk that the financial costs of decommissioning will be left to Australian taxpayers,” he noted.

“It also sets the expectation that sellers will undertake appropriate due diligence before selling assets, titles and infrastructure, so they can avoid being called back to decommission and remediate title areas.”