Liddell Power Station in the NSW Hunter Valley region. Picture: AAP
Liddell Power Station in the NSW Hunter Valley region. Picture: AAP

Coal critical to keeping power prices down

COAL-FIRED power will be needed for decades to come to keep power prices down and the lights on as the Australian energy market transitions to renewables, the Australian Energy Market Operator says.

In a report to be released today, the AEMO says extending the life of coal-fired power stations is the most viable way of keeping energy prices down as the transition takes place.

It also predicts replacing Australia's existing coal-fired network would cost between $8 billion and $27 billion by the mid-2030s.

AEMO's analysis says, based on the projected cost, the cheapest option would be to "retain existing resources for as long as they can be economically relied on".

Liddell Power Station in the NSW Hunter Valley. Picture: AAP
Liddell Power Station in the NSW Hunter Valley. Picture: AAP

"Over the next 20 years, approximately 30 per cent of the NEM's existing coal resources will be approaching the end of their technical lives, and will likely be retired, which highlights the importance of mitigating premature retirements as these resources currently provide essential low-cost energy and system support services required for the safe and secure operation of the power system," it says.

The federal, states and territory governments have already agreed coal-fired power station operators must give three years' notice before they close a plant.

It comes after the closure of Victoria's Hazelwood plant last year.

The federal government is also urging energy retailer AGL to keep the Liddell coal-fired power station open beyond its 2022 closure date.

Federal Energy Minister Josh Frydenberg said removing coal too soon would "prematurely sends people's power bills up, and stability of the grid down".

"That's not a good outcome for consumers, and therefore it is important we listen to the energy market operator," he told ABC Radio this morning.

Mr Frydenberg said the report "doesn't preclude" a new coal-fired power station being built.

Meanwhile, a Newspoll conducted for The Australian has found voters believe the federal coalition is best placed to keep power prices lower and maintain reliable energy supply.


The Turnbull government is leading Labor 40 per cent to 34 per cent on the question of which party had the better approach to energy.

This represents an eight-point turn around from a similar poll conducted in May when voters backed Labor on this issue.

Mr Frydenberg, who will meet with his state and territory counterparts on August 10 to discuss the federal government's planned National Energy Guarantee, said Australia had "turned a corner" on power prices.

"When it comes to energy policy, the Turnbull government has a laser-like focus on reducing power prices," he told The Australian.

"Everything we do is about putting the consumer first and helping create jobs across the economy."

Elsewhere, a separate Guardian Essential poll found 80 per cent of voters support the government launching an inquiry into power companies and high power prices.

It also found 63 per cent want energy companies returned to public ownership.

The federal government needs all of the state and territory governments on board if its National Energy Guarantee - which aims to lower power prices - can go ahead.

John Grimes, chief executive of the Smart Energy Council, said the future of small-scale solar was under a cloud and the government needed to reveal the future of the small-scale renewable energy scheme.

"The National Energy Guarantee is being turned into the national coal guarantee," he said.