AGL to Replace the Liddell Coal Plant with Renewables, Storage and Gas Peakers
23rd Feb 18
Cameron Quin

The Liddell coal-fired power plant in NSW is one of the largest in Australia, and it is now over 40 years old. It suffered a major fault due to the heat wave in February 2017, leading to load curtailing, and the federal government suggested that AGL should renovate the plant to extend its service life beyond 2022. However, AGL have decided that it’s time for the plant to go. A combination of renewable generation and energy storage, complemented with natural gas peakers, can cover the same load at a lower cost and with much less carbon emissions.

After carrying out a detailed analysis, AGL concluded that a renovation for the Liddell coal plant would result in an energy cost of $106 per megawatt-hour (10.6 cents/kWh), while the proposed hybrid solution that combines renewables, storage and natural gas can meet the same load for only $83/MWh (8.3 cents/kWh). The cost of keeping the Liddell coal power plant running is very high, estimated at $920 million.

Coal Generation is No Longer the Cheapest Option

One of the most common arguments against solar and wind power is that they’re still too expensive. However, this overlooks a key fact: new solar and wind farms are compared with very old coal-fired power plants. In the case of new renewable generation, investors are still recovering their capital, while old coal plants covered their upfront cost decades ago. If you compare both technologies on equal terms, new coal-fired plants versus new renewable generation, renewable energy is the clear winner. As existing coal plants reach the end of their service life and require new investments, the cost advantage of renewables becomes evident.

Consider the case of Liddell, where new renewable generation plus battery storage and natural gas beats the price of renovating a coal plant. AGL have pointed out that investors are very interested in new power plants that combine renewable generation and energy storage, but are skeptical towards new coal-fired facilities. It seems the tables have turned: renewable energy is now considered the safe investment option, while coal power is perceived as risky and avoided.

Energy Generation Solution Proposed by AGL

AGL plan to fill the gap left after the Liddell plant is decommissioned with distributed energy resources, not with a single installation. This will improve grid resilience in New South Wales by reducing dependence on a centralised facility.

  • 653 MW of wind power capacity are already under construction.
  • Contracts have also been signed for 300 MW of solar power and 250 MW of natural gas generation. Although natural gas is a fossil fuel like coal, its emissions are much lower; modern natural gas generation technology only produces around one-third of the emissions compared with conventional coal plants.

In future stages of the project, AGL will also deploy large-scale battery storage and possibly pumped-storage hydroelectricity. Up to 750 MW of additional renewable generation could be commissioned, along with 250 MW of battery capacity. Multiple demand-response projects of smaller scale are also considered to further enhance power network reliability.

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Cameron Quin

23rd Feb 18
Cameron Quin

Cameron Quin has been heavily involved in business development from an early age. After founding and selling two online companies, Cameron found a strong passion for renewables and the opportunities it brings for the commercial and industrial sector. Sharing the possibilities of solar and the knowledge from the Solar Bay team is his favourite pastime.