April 2023
April 2023

The Liddell Power Station, located in NSW, closed 28 April 2023. More than 50 years old, it has been unreliable for many years. Based on the Australian Energy Market Operator data, in 2022, Liddell made around 1,200 megawatts available, a fraction of its 2,000MW rated capacity, and generated around 5% of New South Wales total generation sent out.

In the week before the scheduled closure, our CEO, Dr Mary Stewart was interviewed on ABC’s The Business, to discuss the implications of Liddell's closure on power prices and Australia's transition to clean energy. She made a number of comments:

  • The closure of Liddell is no shock. The electricity financial market has long factored in the impact of the removal of this generation capacity.
  • Some impact may be seen on the physical spot market, but any effect is likely to be short term.
  • A greater concern is the planned closure of Eraring Power Station in 2025 when the reduction in generation capacity will have a significant effect. This is because new replacement capacity projects are not coming on line nearly quickly enough. Some $100 billion in new generation and storage assets are needed if we are to meet forecast requirements by 2030/35. For that to occur, $12 billion in new capacity should be constructed each year, however the current rate is around $6 billion.
  • Delays have arisen due to problems accessing capital, network constraints, a skills shortage and problems achieving planning approvals with some projects failing to reach financial close because of community backlash (particularly wind farms).
  • For the pace of replacement of coal fired power generation to accelerate we will need more renewable energy, fast response dispatchable power and new ways to manage frequency and inertia. This means we urgently need more transmission capacity, renewable energy generation and storage capacity, including deep storage, larger flexible demand participation and the roll-out of new technologies such as grid forming inverters.

For further insights and advice, please contact our energy markets team.

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