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It’s been a big week in the world of power — although for different reasons depending on which side of Australia you’re on.
As much of the country struggles to keep the lights on, WA has taken a significant step in its renewables transition, announcing the end of state-run, coal-fired power plants by 2030.
It’s expected to have a big impact on household bills in the future, but why is it happening now, and what does it all mean?
Here’s a rundown of this week’s local energy news.
What are the big changes?
The WA government had previously committed to retiring parts of its largest coal-fired plant, the Muja power station.
But this week, we found out what happens next — as it announced plans to close both of the coal-fired plants run by state-owned power provider Synergy by 2030.
By phasing out coal-fired power, Synergy estimates its carbon emissions would reduce by 80 per cent by 2030.
On top of marking a significant turning point for the nearby coal mining town of Collie, it’s a big shift for the state’s energy network.
To make up for the capacity being lost, the government will spend $3.8 billion over 10 years to add more renewable capacity to the grid.
Why the shift?
WA’s power grid is changing, leaving less room for coal to fit into the mix.
Last year alone, about 300 megawatts of rooftop solar power was added to the grid – almost as much as the smaller of the two state-run plants.
It means during the day there’s little or no need for the coal-fired plants to run, but that causes issues because coal plants aren’t designed to be turned on and off.
It takes 18 hours for a plant to go from being switched off to fully operational.
Will this cause power bills to rise?
The government isn’t giving a straight answer, but says sticking with coal-fired power would ultimately be more expensive.
Premier Mark McGowan said if the coal plants continued to operate, bills would rise by about $1,200 a year by 2030.
Instead, he committed to keeping power prices capped in line with inflation until at least 2025.
At the same time, the government is also hoping these changes can make Synergy more self-sufficient and less reliant on government grants.
Over the next four years, the government is planning to give Synergy $783.3 million in “financial viability” subsidies.
Effectively, that’s money that recognises Synergy doesn’t always act like an ordinary business, because there are times when it has to do things for reasons other than financial gain.
But it’s hoped that by increasing the mix of renewable energy, Synergy’s costs will be lower.
So what will replace the coal plants?
Some of the capacity will be replaced by renewables already being added to the grid – including rooftop solar.
But there still needs to be an ability to provide power when the sun isn’t shining, or when there’s extra demand.
That’s why the new projects outlined in this announcement include 800MW of wind capacity and 2,000MWh of storage – including fast-start lithium-ion batteries.
In welcome news for the town of Collie, the government is also looking into other technologies, including pumped hydro.
When renewable energy is available, it uses that power to pump water up a hill, “storing” the energy.
Then, when the power is needed, it’s allowed to fall back down the hill, through a turbine, which adds power into the grid.
But the government isn’t locking itself into just these schemes, with Synergy given some latitude in how it invests the $3.8 billion it’s receiving.
What about hydrogen?
The government is holding out on hydrogen for a little bit longer.
“In the future we would expect hydrogen to be able to replace natural gas, but that’s currently not financially viable,” Energy Minister Bill Johnston said this week.
At the moment, gas provides about 25 per cent of WA’s power needs.
New gas-fired power stations have been ruled out beyond 2030, and the government says it’s not likely there would be a need to build any before then.
“But we’ll be very cautious in our approach as we move towards 2030, and if we need to take action we will,” Mr Johnston said.
Part of WA’s hydrogen future will be centred around the Asian Renewable Energy Hub, north-east of Port Hedland.
The government this week announced BP would take a 40.5 per cent stake in the hub, which is planning to generate both wind and solar power, as well as producing green hydrogen.
Will this affect WA’s energy security?
The Premier made clear he was confident this plan would secure WA’s energy supply into the future, and the state would avoid the issues being experienced elsewhere.
Part of the reason for those issues has been the nature of the electricity market in the east, which is vastly different to WA’s state-owned system.
Skyrocketing gas prices have also contributed, but WA largely doesn’t have to worry about that because of its domestic reservation policy.
That policy means 15 per cent of gas reserves within the state’s jurisdiction are quarantined for the local market.
It’s good news, both for now and into the future, with WA planning to rely on gas for more of its base-load power, given it can be fired up in as little as 16 minutes.
“When you have a reservation policy with gas, you can turn gas power stations on immediately,” Mr McGowan said this week.
“When you have pumped hydro and batteries, the technology now is so good that you can provide base-load power using those mechanisms combined.”
What do the experts think?
A group of academics from all five of WA’s universities this week accused the state government of being too close to the gas industry and said closing the coal plants was only part of the solution.
“Their emissions are less than the four alumina refineries that we have in the state and far less than the LNG production facilities that we have in this state,” Curtin law school academic Hugh Finn said.
On the other side of the coin, energy policy specialist Katharine McKenzie said the plan was exciting because it allowed for much more detailed planning than had previously been possible.
She said it also made economic sense, given how expensive coal plants were becoming.
“But you also see that that large amount of rooftop solar that’s come in, there’s a real opportunity to make the most of that and aggregate it so that it acts almost like a power station itself,” she said.
That’s the aim of Synergy’s Project Symphony, which is trying to work out how the utility can leverage solar panels and batteries to work together more efficiently.
How does this affect the private sector?
Trends within industry are also accelerating the shift away from coal as businesses try to decarbonise, creating even more opportunities, according to Ms McKenzie.
“They’re very much looking at replacing their current use of fossil fuel generation with renewable energy, but they’re also looking at where they’re directly using fossil fuel in their processes, how they can replace that with direct renewable energy as well,” she said.
“And so coming out of that you have this enormous amount of demand for renewable energy coming in, and that needs to be filled.”
It means the private sector is also likely to start coming to the table, now that the government’s plan is public.
“So the WA government have said that they will commit $3.8 billion to developing new renewable projects, and potentially pumped hydro,” Ms McKenzie said.
“There’s obviously a role for the private sector as well.”
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