As the world battles to slash carbon emissions, Australia considers paying dirty coal stations to stay open longer


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Tim Nelson, Griffith University and Joel Gilmore, Griffith UniversityA long-anticipated plan to reform Australia’s electricity system was released on Thursday. One of the most controversial proposals by the Energy Security Board (ESB) concerns subsidies which critics say will encourage dirty coal plants to stay open longer.

The subsidies, under a so-called “capacity mechanism”, would aim to ensure reliable energy supplies as old coal plants retire.

Major coal generators say the proposal will achieve this aim. But renewables operators and others oppose the plan, saying it will pay coal plants for simply existing and delay the clean energy transition.

So where does the truth lie? Unless carefully designed, the proposal may enable coal generators to keep polluting when they might otherwise have closed. This is clearly at odds with the need to rapidly cut greenhouse gas emissions and stabilise Earth’s climate.

firefighter and bushfire engulfing house
Extending the life of coal plants is at odds with climate action efforts.
Dan Himbrechts/AAP

Paying coal stations to exist

The ESB provides advice to the nation’s energy ministers and comprises the heads of Australia’s major energy governing bodies.

Advice to the ministers on the electricity market redesign, released on Thursday, includes a recommendation for a mechanism formally known as the Physical Retailer Reliability Obligation (PRRO).

It would mean electricity generators are paid not only for the actual electricity they produce, which is the case now, but also for having the capacity to scale up electricity generation when needed.

Electricity prices on the wholesale market – where electricity is bought and sold – vary depending on the time of day. Prices are typically much higher when consumer demand peaks, such as in the evenings when we turn on heaters or air-conditioners. This provides a strong financial incentive for generators to provide reliable electricity at these times.

As a result of these incentives, Australia’s electricity system has been very reliable to date.

But the ESB says as more renewables projects come online, this reliability is not assured – due to investor uncertainty around when coal plants will close and how governments will intervene in the market.




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Under the proposed change, electricity retailers – the companies everyday consumers buy energy from – must enter into contracts with individual electricity generators to make capacity available to the market.

Energy authorities would decide what proportion of a generator’s capacity could be relied upon at critical times. Retailers would then pay generators regardless of whether or not they produce electricity when needed.

Submissions to the ESB show widespread opposition to the proposed change: from clean energy investors, battery manufacturers, major energy users and consumer groups. The ESB acknowledges the proposal has few supporters.

In fact, coal generators are virtually the only groups backing the proposed change. They say it would keep the electricity system reliable, because the rapid expansion of rooftop solar has lowered wholesale prices to the point coal plants struggle to stay profitable.

The ESB says the subsidy would also go to other producers of dispatchable energy such as batteries and pumped hydro. It says such businesses require guaranteed revenue streams if they’re to invest in new infrastructure.

Man gives thumbs up in front of hydro project
Prime Minister Scott Morrison at the Snowy Hydro project. Such generators would also be eligible for the proposed subsidy.
Lukas Coch/AAP

A questionable plan

In our view, the arguments from coal generators and the ESB require greater scrutiny.

Firstly, the ESB’s suggestion that the existing market is not driving investment in new dispatchable generation is not supported by recent data. As the Australian Energy Market Operator recently noted, about 3.7 gigawatts of new gas, battery and hydro projects are set to enter the market in coming years. This is on top of 3.2 gigawatts of new wind and solar under construction. Together, this totals more than four times the operating capacity of AGL’s Liddell coal plant in New South Wales.

It’s also difficult to argue the system is made more reliable by paying dispatchable coal stations to stay around longer.

One in four Australian homes have rooftop solar panels, and installation continues to grow. This reduces demand for coal-fired power when the sun is shining.

The electricity market needs generators that can turn on and off quickly in response to this variable demand. Hydro, batteries and some gas plants can do this. Coal-fired power stations cannot – they are too slow and inflexible.

Coal stations are also becoming less reliable and prone to breakdowns as they age. Paying them to stay open can block investment in more flexible and reliable resources.

Critics of the proposed change argue coal generators can’t compete in a world of expanding rooftop solar, and when large corporate buyers are increasingly demanding zero-emissions electricity.

There is merit in these arguments. The recommended change may simply create a new revenue stream for coal plants enabling them to stay open when they might otherwise have exited the market.

Governments should also consider that up to A$5.5 billion in taxpayer assistance was allocated to coal-fired generators in 2012 to help them transition under the Gillard government’s (since repealed) climate policies. Asking consumers to again pay for coal stations to stay open doesn’t seem equitable.

Steam billows from coal plant
Coal plants have already received billions in subsidies.
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The ultimate test

The nation’s energy ministers have not yet decided on the reforms. As usual, the devil will be in the detail.

For any new scheme to improve electricity reliability, it should solely reward new flexible generation such as hydro, batteries, and 100% clean hydrogen or biofuel-ready gas turbines.

For example, reliability could be improved by establishing a physical “reserve market” of new, flexible generators which would operate alongside the existing market. This generation could be seamlessly introduced as existing generation fails and exits.

The ESB has recommended such a measure, and pivoting the capacity mechanism policy to reward only new generators could be beneficial.

The Grattan Institute
has also proposed a scheme to give businesses more certainty about when coal plant will close. Together, these options would address the ESB’s concerns.

This month’s troubling report by the Intergovernmental Panel on Climate Change was yet another reminder of the need to dramatically slash emissions from burning fossil fuels.

Energy regulators, politicians and the energy industry owe it to our children and future generations to embrace a zero-emissions energy system. The reform of Australia’s electricity market will ultimately be assessed against this overriding obligation.




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The Conversation


Tim Nelson, Associate Professor of Economics, Griffith University and Joel Gilmore, Associate Professor, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

A tale of two valleys: Latrobe and Hunter regions both have coal stations, but one has far worse mercury pollution


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Larissa Schneider, Australian National University; Anna Lintern, Monash University; Cameron Holley, UNSW; Darren Sinclair, University of Canberra; Neil Rose, UCL; Ruoyu Sun, and Simon Haberle, Australian National UniversityWe know coal-fired power stations can generate high levels of carbon dioxide, but did you know they can be a major source of mercury emissions as well?

Our new research compared the level of mercury pollution in the Hunter Valley in New South Wales and the Latrobe Valley in Victoria.

And we found power stations in the Latrobe Valley emit around 10 times more mercury than power stations in the Hunter Valley. Indeed, the mercury level in the Latrobe Valley environment is 14 times higher than what’s typically natural for the region.

So why is there such a stark difference between states? Well, it has a lot to do with regulations.

Following a NSW requirement for power stations to install pollution control technology, mercury levels in the environment dropped. In Victoria, on the other hand, coal-fired power stations continue to operate without some of the air pollution controls NSW and other developed countries have mandated.

To minimise the safety risks that come with excessive mercury pollution, coal-fired power stations in all Australian jurisdictions should adopt the best available technologies to reduce mercury emissions.

A dangerous neurotoxin

Mercury is a neurotoxin, which means it can damage the nervous system, brain and other organs when a person or animal is exposed to unsafe levels.

Coal naturally contains mercury. So when power stations burn coal, mercury is released to the atmosphere and is then deposited back onto the Earth’s surface. When a high level of mercury ends up in bodies of water, such as lakes and rivers, it can be transferred to fish and other aquatic organisms, exposing people and larger animals to mercury that feed on these fish.




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Mercury does not readily degrade or leave aquatic environments such as lakes and rivers. It’s a persistent toxic element — once present in water, it’s there to stay.

The amount of mercury emitted depends on the type of coal burnt (black or brown) and the type of pollution control devices the power stations use.

The Latrobe Valley stations in Victoria burn brown coal, which has more mercury than the black coal typically found in NSW. Despite this, Victorian regulations have historically not placed specific limits on mercury emissions.

In contrast, NSW power plants are required to use “bag filters”, a technology that’s used to trap mercury (and other) particles before they enter the atmosphere.

While bag filters alone fall short of the world’s best practices, they can still be effective. In fact, after bag filters were retrofitted to Hunter Valley’s Liddell power station in the early 1990s, mercury deposition in the surrounding environment halved.

Mercury deposited in sediments of Lake Glenbawn (left) in the Hunter Valley and Traralgon Railway Reservoir (right) in the Latrobe Valley.

The best available technology to control mercury emissions from coal-fired power plants is a combination of “wet flue-gas desulfurization” (which removes mercury in its gaseous form) and bag filters (which removes mercury bound to particles).

This is what’s been adopted across North America and parts of Europe. It not only filters out mercury, but also removes sulphur dioxide, nitrogen oxides and other toxic air compounds.

Using lake sediments to see into the past

Lake sediments can capture mercury deposited from the atmosphere and from surrounding areas. Sediments that contain this mercury accumulate at the bottom of lakes over time — the deeper the sediment, the further back in time we can analyse.

We took sediment samples from lakes in the Latrobe and Hunter valleys, and dated them back to 1940 to get a historical record of mercury deposition.

This information can help us understand how much naturally occurring mercury there was before coal-fired power stations were built, and therefore show us the impact of burning coal.

A power station by a lake
Lake Narracan: one of the lakes we sampled sediments from, near a coal-fired power station in Latrobe Valley.
Larissa Schneider, Author provided

From these records, we found the adoption of bag filters in the Hunter Valley corresponded with mercury depositions declining in NSW from the 1990s.

In contrast, in Victoria, where there’s been no such requirement, mercury emissions and depositions have continued to increase since Hazelwood power station was completed in 1971.

What do we do about it?

In March, the Victorian government announced changes to the regulatory licence conditions for brown coal-fired power stations. Although mercury emissions allowances have been included for the first time, they’re arguably still too high, and there’s no requirement to install specific pollution control technologies.

There’s a risk this approach won’t reduce mercury emissions from existing levels. Victoria should instead consider more ambitious regulations that encourage the adoption of best practice technology to help protect local communities and the environment.

Coal-fired power station at the end of a road, at night
Loy Yang power station, Victoria’s largest, burns brown coal which contains more mercury.
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Another vital step toward protecting human health and the environment from mercury is for the federal government to ratify the Minamata Convention on Mercury, an international treaty to protect human health and the environment from mercury.

Despite signing the convention in 2013, the Australian government is yet to ratify it, which is required to make it legally binding in Australia.

Ratifying the convention will oblige state and federal governments to develop and implement a strategy to reduce mercury emissions, including from coal-fired power stations across Australia. And this strategy should include rolling out effective technologies — our research shows it can make a big difference.


The authors acknowledge Lauri Myllyvirta from the Centre for Research on Energy and Clean Air for her contributions to this article.




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The Conversation


Larissa Schneider, DECRA fellow, Australian National University; Anna Lintern, Lecturer, Monash University; Cameron Holley, Professor, UNSW; Darren Sinclair, Professor, University of Canberra; Neil Rose, Professor of Environmental Pollution and Palaeolimnology, UCL; Ruoyu Sun, Associate Professor, and Simon Haberle, Professor, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Paying Australia’s coal-fired power stations to stay open longer is bad for consumers and the planet


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Daniel J Cass, University of Sydney; Joel Gilmore, Griffith University, and Tim Nelson, Griffith UniversityAustralian governments are busy designing the nation’s transition to a clean energy future. Unfortunately, in a misguided effort to ensure electricity supplies remain affordable and reliable, governments are considering a move that would effectively pay Australia’s old, polluting coal-fired power stations to stay open longer.

The measure is one of several options proposed by the Energy Security Board (ESB), the chief energy advisor to Australian governments on electricity market reform. The board on Friday released a vision to redesign the National Electricity Market as it transitions to clean energy.

The key challenges of the transition are ensuring it is smooth (without blackouts) and affordable, as coal and gas generators close and are replaced by renewable energy.

The redesign has been two years in the making. The ESB has done a very good job of identifying key issues, and most of its recommendations are sound. But its option to change the way electricity generators and retailers strike contracts for electricity, if adopted, would be highly counterproductive – bad both for consumers and for climate action.

Electricity lines at sunset
One proposed reform to Australia’s electricity market would be bad for consumers and climate action.
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The energy market dilemma

The National Electricity Market (NEM) covers every Australian jurisdiction except Western Australia and the Northern Territory. It comprises electricity generators, transmission and distribution networks, electricity retailers, customers and a financial market where electricity is traded.

Electricity generators in the NEM comprise older, polluting technology such as gas- and coal-fired power, and newer, clean forms of generation such as wind and solar. Renewable energy, which makes up about 23% of our electricity mix, is now cheaper than energy from coal and gas.

Wind and solar energy is “variable” – only produced when the sun is shining and the wind is blowing. Technology such as battery storage is needed to smooth out renewable energy supplies and make it “dispatchable”, meaning it can be delivered on demand.

Some say coal generators, which supply dispatchable electricity, are the best way to ensure reliable and affordable electricity. But Australia’s coal-fired power stations, some of which are more than 40 years old, are becoming more prone to breakdowns – and so less reliable and more expensive – as they age. This has led to some closing suddenly.

Without a clear national approach to emissions targets, there’s a risk these sudden closures will occur again.




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Wind farm near coast
Wind and solar energy is variable.
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So what’s proposed?

To address reliability concerns, the ESB has proposed an option known as the “physical retailer reliability obligation”.

In a nutshell, the change would require electricity retailers to negotiate contracts for a certain amount of “dispatchable” electricity from specific generators for times of the year when reliability is a concern, such as the peak weeks of summer when lots of people use air conditioning.

Currently, the Australian Energy Market Operator has reserve electricity measures it can deploy when market supply falls short.

But under the new obligation, all retailers would also have to enter contracts for dispatchable supply. This would likely require buying electricity from the coal generators that dominate the market. This provides a revenue source enabling these coal plants to remain open even when cheaper renewable energy makes them unprofitable.

The ESB says without the change, the closure of coal generators will be unpredictable or “disorderly”, creating price shocks and reliability risks.

hand turns off light switch in bedroom
The ESWB says the recommendation would address concerns over electricity reliability.
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A big risk

Even the ESB concedes the recommendation comes with considerable risks. In particular, the board says it may:

  • impose increased barriers to retail competition and product innovation
  • lead to possible overcompensation of existing coal and gas generators.

In short, the policy could potentially lock in increasingly unreliable, ageing coal assets, stall new investment in new renewable energy storage such as batteries and pumped hydro and increase market concentration.

It could also push up electricity prices. Electricity retailers are likely to pass on the cost of these new electricity contracts to consumers, no matter how much energy that household or business actually used.

The existing market already encourages generators to provide reliable supply – and applies strong penalties if they don’t. And in fact, the NEM experiences reliability issues for an average of just one minute per year. It would appear little could be added to the existing market design to make generators more reliable than they are.

Finally, the market is dominated by three large “gentailers” – AGL, Energy Australia and Origin – which own both generators and the retail companies that sell electricity. The proposed change would disadvantage smaller electricity retailers, which in many cases would be forced to buy electricity from generators owned by their competitors.

Australia’s gentailers are heavily invested in coal power stations. The proposed change would further concentrate their market power while propping up coal.




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warning sign on fence
The proposed change brings a raft of risks to the electricity market.
Kelly Barnes/AAP

What governments should do

If coal-fired power stations are protected from competition, it will deter investment in cleaner alternatives. The recommendation, if adopted, would delay decarbonisation and put Australia further at odds with our international peers on climate policy.

The federal and state governments must work together to develop a plan for electricity that facilitates clean energy investment while controlling costs for consumers.

The plan should be coordinated across the states. Without this, we risk creating a sharper shock later, when climate diplomacy requires the planned retirement of coal plants. Other nations have acknowledged the likely demise of coal, and it’s time Australia caught up.




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The Conversation


Daniel J Cass, Research Affiliate, Sydney Business School, University of Sydney; Joel Gilmore, Associate Professor, Griffith University, and Tim Nelson, Associate Professor of Economics, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Electricity has become a jigsaw. Coal is unable to provide the missing pieces



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Peter Martin, Crawford School of Public Policy, Australian National University

There’s something the energy minister said when they announced the early closure of Victoria’s second-biggest coal-fired power station last week that was less than complete.

Yallourn, in the Latrobe Valley, provides up to 20% of Victoria’s power. It has been operating for 47 years. Since late 2017 at least one of its four units has broken down 50 times. Its workforce doubles for three to four months most years to deal with the breakdowns. It pumps out 3% of Australia’s carbon emissions.

On Wednesday Energy Australia gave seven years notice of its intention to close it in mid-2028, four years earlier than previously announced, a possibility for which regulators had been preparing.

In what might have been a rhetorical flourish, Energy Minister Angus Taylor warned of “price spikes every night when the sun goes down”.

Then he drew attention to what had happened when two other coal-fired power stations closed down — Victoria’s Hazelwood and South Australia’s Northern (South Australia’s last-remaining coal-fired generator).

He said “wholesale prices skyrocketed by 85%”.

And there he finished, without going on to detail what really mattered. South Australia and Victoria now have the lowest wholesale power prices in the National Electricity Market — that’s right, the lowest.

Coal-fired plants close, then prices fall

Before Northern closed, South Australia had Australia’s highest price.

Five years after the closure of Northern in 2016, and four years after the closure of Hazelwood in 2017, South Australia and Victorian have wholesale prices one-third lower than those in NSW and two-fifths lower than those in Queensland.

Something happened after the closure (largely as a result of the closure) that forced prices down.

South Australia became a renewables powerhouse.

South Australian wind projects congregate around power lines.
AEMO

The Australian National University’s Hugh Saddler points out that renewable-sourced power — wind and grid solar — now accounts for 62% of power supplied to the South Australian grid, and at times for all of it.

Much of it is produced near Port Augusta, where the Northern and Playford coal-fired power stations used to be, because that’s where the transmission lines begin.

Being even cheaper than the power produced by the old brown-coal-fired power stations, there is at times so much it that it sends prices negative, meaning generators get paid to turn off in order to avoid putting more power into the system than users can take out.

It’s one of the reasons coal-fired plants are closing: they are hard to turn off. They are just as hard to turn on, and pretty hard to turn up.

Coal can’t respond quickly

There are times (when the wind doesn’t blow and there’s not much sun, such as last Friday in South Australia) when prices can get extraordinarily high.

But coal-fired plants, especially brown-coal-fired plants such as Victoria’s Hazelwood and Yallourn and Victoria’s two remaining big plants, Loy Yang A and B, are unable to quickly ramp up to take advantage of them.

Although “dispatchable” in the technical meaning of the term used by the minister, coal-fired stations can’t fill gaps quickly.




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Batteries can respond instantly to a loss of power from other sources (although not for very long), hydro can respond in 30 to 70 seconds, gas peaking plants can respond within minutes.

But coal can barely move. As with nuclear power, coal-fired power needs to be either on (in which case it can only slowly ramp up) or off, in which case turning it on from a standing start would be way too slow.

What was a feature is now a bug

That’s why coal-fired generators operate 24-7, to provide so-called base-load, because they can’t really do anything else.

Snowy Hydro generators can be turned on and off at will.
Alex Ellinghausen/AAP

Brown coal generators are the least dispatchable. Brown coal is about 60% water. To make it ignite and keep boiling off the water takes sustained ultra-high temperatures. Units at Yallourn have to keep burning coal at high output (however low or negative the prices) or turn off.

In the days when the other sources of power could be turned on and off at will, this wasn’t so much of a problem.

Hydro or gas could be turned on in the morning when we turned on our lights and heaters and factories got down to business, and coal-fired power could be slowly ramped up.

At night, when there was less demand for coal-fired power, some could be created by offering cheap off-peak water heating.

But those days are gone. Nationwide, wind and solar including rooftop solar supplies 20% of our needs. It turns on and off at will.

Wind often blows strongly at night. What was a feature of coal — its ability to provide steady power rather than fill gaps – has become a bug.

Gas and batteries can fill gaps coal can’t

It’s as if our power system has become a jigsaw with the immovable pieces provided by the wind and the sun. It’s our job to fill in the gaps.

To some extent, as the prime minister says, gas will be a transition fuel, able to fill gaps in a way that coal cannot. But gas has become expensive, and batteries are being installed everywhere.

Energy Australia plans to replace its Yallourn power station with Australia’s first four-hour utility-scale battery with a capacity of 350 megawatts, more than any battery operating in the world today. South Australia is planning an even bigger one, up to 900 megawatts.




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Australia’s Future Fund and AGL Energy are investing $2.7 billion in wind farms in NSW and Queensland which will fill gaps in a different way — their output peaks at different times to wind farms in South Australia and Victoria.

Filling the gaps won’t be easy, and had we not gone down this road there might still have been a role for coal, but the further we go down it the less coal can help.

As cheap as coal-fired power is, it is being forced out of the system by sources of power that are cheaper and more dispatchable. We can’t turn back.The Conversation

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Mangrove Forest Under Threat in Bangladesh


The world’s largest mangrove forest in Bangladesh is under threat from a proposal to build a coal-fired power plant.

For more visit:
http://e360.yale.edu/feature/a_key_mangrove_forest_faces_major_threat_from_a_coal_plant/2704/