Clean coal could trump renewables bill in Australia

A high-efficiency, low emissions (HELE) coal-fired station would cost less than the almost A$3 billion (roughly $2.3bn) of subsidies handed out for renewable projects each year, a study published Monday argues.

According to the report released by the Minerals Council of Australia and COAL21 Fund — a nest egg owned by local coal producers —, the sum required to build a 1000MW ultra-supercritical (USC) coal-power plant is A$2.2bn.

The figure, based on data compiled by power and energy sector specialists GHD and Solstice Development Services, not only is lower than the total subsidies for renewables, but it would generate the cheapest electricity on the market, the study says.

Clean coal could trump renewables bill in Australia

Source: BAE Economics for Minerals Council of Australia.

A HELE coal plant would produce electricity at $40-$78 per megawatt hour, compared with gas at $69-$115/MWh and solar at $90-$171. That means, according to the study, that clean-coal plants could drive down energy­ prices in Australia.

That outcome would be more than welcome by consumers, which are bracing for a 20% increase in electricity costs between 2017 and 2018.

On top of that, an increase in electricity demand paired with a drop in supply since 2014 have strained the Australian grid, causing outages amid heat waves and storms. The worst — an eight-hour blackout in South Australia last year — crippled industry for up to two weeks and triggered public outrage.

Getting new-generation coal plants across the line wouldn’t be an easy task. Not only the federal government would likely face fierce opposition from environmental groups, but also it would have to solve what David Byrne, researcher and lecturer in economics at the University of Melbourne calls “the energy trilemma”:

In the face of rapid technological change in the energy sector, policy needs to evolve to achieve three objectives:

  • meet Australia’s Climate Change commitments under the Paris Agreement;
  • ensure stable supply of energy so the ‘lights don’t go out’ (again);
  • mitigate rising electricity costs, particularly for vulnerable and elderly households.

Addressing this challenge is akin covering a floor with a rug where the rug is just a bit too small.

  • coal-fired power plants have provided stable, low-cost energy supply to Australians for years, yet they are very heavy polluters;
  • wind and solar energy is clean with zero production cost once windmills or solar panels are in place, but they only generate power when the wind blows and sun shines, thereby creating energy supply instability;
  • natural gas is significantly cleaner than coal and can readily provide stable energy supply, but its cost is rapidly rising on the international market.

In short, each of these three primary sources of power solves two of three problems. No matter how you position the rug, one of the corners of the room is uncovered.

In addition, authorities would have to deal with the fact that none of the country's major generators — AGL Energy, Engie, Origin or EnergyAustralia — wants to build new coal -fired plants, as their customers and shareholders push for cleaner energy.

Coal -fired power has fallen to around 63% of Australia's total generation as of 2015, official data shows, down from around 80% in 2000.