Early Yallourn closure can be absorbed by increasing renewable energy supply, new analysis finds

The inevitable early closure of the ageing Yallourn power station could be absorbed by 2023, and supply shortages and price spikes avoided, by immediate investment in replacement renewable supply and storage, according to new analysis by Reputex commissioned by Environment Victoria.

Speculation is rife that Yallourn, Victoria’s oldest, most unreliable and polluting coal-burning power station, will close well before its currently scheduled closure date of 2032. The ageing power station creates significant risk to Victoria’s energy security, particularly over hot summer months when demand is high and coal generators are more vulnerable to failure.

Immediate investment in renewable energy generation and battery storage would reduce wholesale prices faster than current trends and help avoid a price spike at the moment of closure, like those seen when Hazelwood power station closed in 2017.

“Yallourn has broken down 33 times in 18 months. Almost everyone accepts it will close before the announced 2032 timeframe. The question is how soon, and how well we prepare for it,” said Environment Victoria Campaigns Manager Dr Nicholas Aberle.

“The Victorian government has a simple choice: build replacement supply now to prepare for Yallourn’s inevitable closure and reduce risk to the energy system, or be hit with price spikes and the risk of blackouts when the decision comes out of a boardroom in Hong Kong.

“From a climate risk perspective, Yallourn should close as soon as possible. From an energy perspective, there is now a plausible combination of solutions that enable Yallourn to close by 2023 in a way that has minimal impact on the grid and on power prices.

“The vast majority of Victorians want action on climate change, and they want affordable and reliable power. This analysis shows we can have all three.

“By building the large-scale renewables, transmission upgrades and battery storage outlined in this analysis, together with continuing the roll-out of the Solar Homes program, the impacts to the electricity system of Yallourn closing can be eliminated.

“The Andrews government needs a plan for replacing Yallourn’s output before it closes – whether it has a catastrophic break-down in a summer heatwave or it is in response to credible climate targets and growth of renewable energy.

“Here is one plan that is achievable within 3 years, and we call on the government to ensure the necessary replacement is built now. The public expects the Victorian government to manage the risks to our energy system while tackling our very high greenhouse gas emissions.”

The analysis also found that building renewable generation and storage solutions involves an additional 27,000 job-years, bringing investment worth $6.8 billion to Victoria’s economy.

“We call on the government to ensure some of the replacement supply is built in the Latrobe Valley and to extend the funding of the Latrobe Valley Authority, whose important role in supporting workers and bringing new economic activity to the region must continue,” said Dr Aberle.

The RepuTex analysis is available here.

Key findings from the RepuTex report:

• “A combination of large- and small-scale renewable energy (an additional 2.6 and 0.3 GW respectively), along with ‘big battery’ storage (0.6 GW), small ‘virtual power plants’ storage (0.5 GW), and other demand-side participation (0.2 GW), can provide the available resources necessary to compensate for the absence of Yallourn by the summer of 2023/24.”
• “This includes both enough annual energy to mitigate wholesale price rises and maintain regional power reliability through heatwaves and other extreme events to prevent ‘blackouts’.”
• “Modelling indicates that with effective planning the Victorian market can compensate for the closure of Yallourn as early as April 2023.”
• “Even if Yallourn continues to operate this date, these new measures would position Victoria to mitigate future capacity failures as existing facilities age.”