ITK believes the risk of coal fired power stations closing earlier than 50 years rated life is much greater than the risk they will stay open beyond that time frame.
The most obvious reason for thinking this is statistical and reflects Tim Nelson’s estimate on percentage of operating coal fired power stations that are more than 50 years old. A better statistic would be one that shows how long coal fired stations last, but its not available.
Beyond the general statistics we look to things like, coal supply, refurbishment costs, environmental issues and competition for market share to determine economics. Clearly coal supply source needs to change over the life of a station as 50 year old coal mines are not likely to have cheap coal.
Essentially our list of the most vulnerable stations includes Vales Point and Mt Piper in NSW, Gladstone and Tarong in Qld and Yallourn in Victoria.
The attached pages provide some facts and figures but its a very tricky area with decisions often based on incalculable factors such as management sentiment.
Our starting point for three years now is that NSW is the State at risk from early closure. Its done less to get new supply into the market and is a net importer. Its risk increases post 2022 when Liddell closes.
ITK’s basic idea is to get new supply built in front of power stations closing. We accept that doing that both will have costs to producers, ultimately borne by consumers (when there is excess supply) and also hastens closure of the coal fired power station. In our view, from a global warming, climate change perspective that’s a welcome development. We also think that new supply of wind & solar fired as needed will be competitive with or cheaper than existing thermal supply and certainly cheaper than new thermal supply even if we ridiculously ignored carbon. Further more it protects business against rising coal and gas prices.
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