News | 1st Aug, 2013

AGL says 9GW of baseload fossil fuels no longer needed

1 August 2013

Giles Parkinson, Renew Economy

AGL Energy, one of the big three power utilities in Australia, says that 9,000MW of fossil-fuel baseload capacity needs to be taken out of the national electricity market (NEM) to bring it back into balance.

The claim was made by managing director Michael Fraser, on Wednesday, at the announcement that AGL Energy had secured extra financing for its 155MW solar PV project in western NSW – the first solar project of its scale to be built in Australia.

To agree to proceed, however, Fraser said AGL Energy sought extra funding from the Australian Renewable Energy Agency to make up for equivalent estimated falls in wholesale electricity prices.

“We have got an oversupplied wholesale market,” Fraser told RenewEconomy on the sidelines of the announcement.

“There is too much baseload relative to where demand has got to, and rooftop solar has impacted on demand … and that has impacted on the economics of coal-fired generators.

“We guess there is around 9,000MW of oversupply in the market. That’s not helpful, either for existing assets or for trying to get new projects off the ground.”

That assessment of 9,000MW equates to nearly one-third of the country’s baseload generation – a sure sign that renewables, and in particularly rooftop solar, are changing the dynamics of the market. And it also suggests that some state governments built more generators than was necessary, as they have done more recently with poles and wires.
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