Michael Mazengarb & Giles Parkinson
10 March 2021
EnergyAustralia will close the Yallourn Power station four years earlier than planned, announcing an accelerated closure date of mid-2028 as coal generators face the impacts of falling electricity prices and the rising costs of maintaining ageing infrastructure.
EnergyAustralia had previously indicated that the power station would close in 2032, when the power station is expected to exhaust its supplies of coal from the Yallourn mine, but analysts have said the rapidly changing market, and the ageing generator’s inability to handle flexible output, would likely mean an early closure.
EnergyAustralia announced that as part of the closure plans, a new big battery facility would be built at Jeeralang in the Latrobe Valley, with 350MW of capacity and up to four hours of storage.
The battery would be up and running by 2026, ahead of the closure of the Yallourn power station. EnergyAustralia claimed it to be the world’s biggest, but rival Origin Energy has already flagged an even bigger battery (700MW and 2,800MWh) at its Eraring coal plant in NSW, which is scheduled to close in 2032.
Around 500 people work at the Yallourn power station. It is understood that EnergyAustralia’s head of Yallorn Julian Turecek told staff that the power station was set to close early via text message on Wednesday morning, ahead of a staff briefing session held later in the day.
EnergyAustralia’s managing director Catherine Tanna said a deal for the closure has been reached with the Victoria government to ensure a smooth transition.
“The world of energy is rapidly changing,” Tanna told a media briefing on Wednesday, “Today marks day one of the long term plan that brings together many people from across the energy sector. We are determined to show Australia that when it comes to the energy transition, it is possible to move from the old to the new in a way that does not leave people behind.”
“We are ensuring energy storage is built before Yallourn exits the system, helping to secure Victoria’s energy supply and enable more renewables to enter the system.” Tanna said.
“The energy market transition is real and it’s happening fast. I think it’s fair to say it’s happening faster than most people forecast.”
The power station is Victoria’s oldest, and one of oldest in the country, with construction of the ‘Yallourn W’ units that still operate currently, commencing in the early 1970s.
The 1,450MW Yallourn Power Station in Victoria’s Latrobe Valley runs on lower quality brown coal, and ranks as one of the dirtiest power stations in Australia.
According to most recent data published by the Clean Energy Regulator, Yallourn produced 12.4 million tonnes of greenhouse gas emissions in the 2019/20 financial year, and produced an average of 1.28 tonnes of carbon dioxide equivalent emissions per megawatt-hour of electricity generated, one of the highest in the country.
The early closure of the Yallourn Power Station would leave AGL Energy’s Loy Yang A power station, and the Loy Yang B plant owned by Chow Tai Fook Enterprises, which also owns Alinta Energy, as the last two operating brown coal power stations in Australia.
Victoria has a target of reaching 50 per cent renewables by 2030, although its ability to reach or beat that target will depend on its ability to roll out sufficient network infrastructure.
Some analysts, such as ITK’s David Leitch, were surprised that Yallourn would continue that long. Tanna said the system needed Yallourn to stay that long for grid reliability, and talked of a “safety net” agreed with the Victoria government to “ensure that happens.”
The Australia Institute’s climate and energy program director, Richie Merzian, said that it came as no surprise that Yallourn would be closing early, as the power station has suffered a growing number of unplanned outages.
“Yallourn is the oldest coal power station in Victoria and the most unreliable power station in the entire country. Since December 2017 it has broken down 50 times,” Merzian said.
“In positive news for the workers at Yallourn, the Victorian Government has mandated that power station owners give at least seven years notice before closure, which is more than twice the notice required in other states.”
There has been growing speculation that some of Australia’s coal fired generators could face early closure, as falling electricity prices and the growth of wind and solar as a lower cost source of electricity have worked to squeeze margins and market shares for coal plants.
Clean Energy Council chief executive Kane Thornton said that strong investment in new wind and solar generation had created conditions that were allowing Australia’s coal generator fleet to close early.
“The massive uptake of renewable energy and batteries is creating thousands of jobs, driving down power prices and resulting in a fundamental shift for Australia’s energy system. This is allowing more of our very old, expensive and polluting coal-fired power stations to close,” Thornton said.
“Industry, government and unions must work together to manage this inevitable transition so that people and their communities aren’t left behind. There are enormous opportunities in the new energy world, but it requires leadership, planning and commitment to unlock and take everyone with us.”