AEMO Recommends Australia to Shut Down 90 Percent of Coal-fired Power Plants in 10 Years to Meet Emission Goals
AEMO’s CEO stated that this scenario is the most likely outcome if the government is dedicated to the transition to net zero.
The Australian Energy Market Operator (AEMO) has emphasized the need for Australia to replace 90 percent of its coal-fired power plants within the next 10 years to meet carbon emission targets.
This concern arises amidst doubts about AEMO’s role in the renewable energy transition and its inability to predict electricity prices accurately.
During a recent inquiry hearing, AEMO CEO Daniel Westerman discussed the current state of the national electricity market and the country’s coal-fired power plants.
He stated, “Over the last 12 months, coal has accounted for approximately 55 percent of the national electricity market’s energy needs, with around 40 percent coming from renewable sources and 5 percent from gas.” He also mentioned the retirement of 12 coal-fired power stations in the past decade, a trend expected to continue.
The CEO clarified that the decision to shut down these power stations lies with the asset owners and is not influenced by AEMO.
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According to Westerman, power station owners must give AEMO a notice of three-and-a-half years prior to closure.
There are various predictions regarding the closure of fossil fuel power stations in the foreseeable future.
In order to meet Australia’s emissions goals and achieve net zero, Westerman stated that it is anticipated that 90 percent of coal-fired power stations will close within the next decade. However, he clarified that this is a likely scenario, not a definite conclusion, contingent upon the government’s commitment to meeting emission targets.
Westerman also highlighted the significant shift in operations of coal-fired power stations due to the introduction of renewable energy.
He mentioned, “Some coal-fired power plants that used to operate constantly are now reducing their generation to a minimum during the day. A few plants are even turning off in the middle of the day due to economic reasons benefiting consumers.”
AEMO Questioned for Inability to Predict Electricity Prices
During the hearing, Nationals Senator Matt Canavan questioned AEMO about the possibility of lower electricity prices for Australian households in light of the substantial investments in renewable energy by the government and private sector.
Canavan raised concerns about the escalating electricity prices in Australia compared to other countries like the US, despite having abundant energy resources.
In response, Westerman mentioned that AEMO does not forecast future power prices and emphasized the importance of investing in renewable energy and securing energy systems to achieve net zero while ensuring reliability.
Canavan questioned why AEMO, despite engaging in long-term planning for the electricity system, is unable to predict electricity prices accurately.
Westerman explained that AEMO focuses on the most cost-effective approach to meet energy reliability targets within the government’s net zero emission targets, omitting factors such as local investments in energy resources and technology.
An Origin Energy power bill is pictured in Brisbane, Australia, on June 5, 2018. AAP Image/Dan Peled
Australia’s Electricity Prices Are 3 Times Higher Than the US: Canavan
Canavan expressed dismay over the high electricity prices in Australia compared to the US, despite Australia’s abundant energy resources.
He questioned how Australia, with similar energy resources to the US but higher prices, found itself in such a situation.
Westerman stated that he could not provide an answer at the moment.
