Changes to Renewable Energy Target required for a sustainable electricity market

EnergyAustralia will scale back generation at Yallourn Power Station in Victoria, as the carbon price significantly increases the costs of operation together with weak wholesale electricity prices and falling electricity demand.

EnergyAustralia has decided it will operate only three of the four units at the Gippsland-based power station at this time.
 
The Federal Renewable Energy Target is acting to suppress wholesale electricity prices to uneconomic levels, adding to the downward pressure on prices as a result of weak electricity demand.
 
Group Executive Manager, Energy Markets, Mark Collette said Yallourn Power Station would continue to play an important role in the Latrobe Valley and in the National Electricity Market.
 
“It is too early to tell what impact this will have on jobs, but in this competitive wholesale environment it is important to have a strong focus on costs,” Mr Collette said.
 
“This is an example of the carbon price working to reduce Australia’s emissions and is confirmation of the importance of the Government’s decision to provide transitional assistance to brown coal generators.”
 
Mr Collette said while EnergyAustralia remains committed to the Renewable Energy Target he was concerned the current design of the scheme would continue to force more expensive generation capacity into an already over-supplied market with falling demand, unnecessarily increasing cost to customers.
 
“The current design of the Renewable Energy Target threatens the sustainability of Australia’s electricity market and needs to be recalibrated in line with falling demand, easing cost pressures on Australian electricity customers.”
 
“Independent modelling has shown the RET will come at a further cost of around $53 billion for electricity customers – more than the cost of the National Broadband Network. Recalibrating the Renewable Energy Target in line with falling demand would ensure the 20 per cent Renewable Energy Target is delivered while saving customers $25 billion,” he said.
 
EnergyAustralia’s decision follows recent announcements by Stanwell Corporation and Alinta Energy to withdraw coal-fired units from the National Electricity Market.
 
In recent times, the reduced operation or closure of over 3000MW of coal-fired generation has been announced.
 
The Yallourn Power Station and Mine is able to sustain the operation of four units, which were operating earlier this month.
For further information please contact: Emma Tyner 0413 264 342.
 
The threats to Yallourn’s coal operations after the Morwell River Diversion collapse in June this year are being addressed and further dewatering of the mine will stabilise the operation.
 
EnergyAustralia has a strong commitment to investing in and developing cleaner generation.
 
EnergyAustralia has recently entered into power purchase agreements with two wind farm projects in New South Wales with a total installed capacity of almost 215MW. EnergyAustralia’s generation portfolio also includes the 111MW Waterloo and 66MW Cathedral Rocks wind farms in South Australia and it is seeking to develop a number of projects including the $300 million Stony Gap (123MW) wind farm in South Australia to further expand its renewable generation.