HAZELWOOD SHOULD STAY OPEN
Published in the Herald Sun, 24 March 2017
If we are serious about tackling Australia’s looming energy crisis, the last thing we should be doing is closing 20 per cent plus of Victoria’s (and 5 per cent of Australia’s) base load power supply. Yet that’s what’s scheduled to happen next week unless there is an eleventh hour intervention by government or a last minute change of heart by the station’s operator.
Sure, brown coal is more emissions intensive than gas. Yes, coal lacks the “big new thing” allure of pumped hydro. Still, it’s given Victoria and South Australia cheap, reliable base load power, making those states our country’s manufacturing hubs. And until equally cost effective and reliable alternative supplies can be established, having Hazelwood close is sheer, avoidable folly.
Keeping Hazelwood open would make a lot more difference than pumped hydro which is trying to solve today’s problem in some years’ time. Still, the Prime Minister’s Snowy Scheme 2.0, plus the South Australian commitment to a new gas-fired base load power station, shows that our leaders are finally thinking about what might be done to keep the lights on. So far, though, no one in authority is talking about the one thing that could boost base load power by almost 2000 megawatts immediately: not closing Hazelwood next week.
If we want secure and affordable power supplies, we can’t lose the ones we currently have even if they involve burning coal. The past few months, with the state-wide blackout in South Australia and the blackout which badly damaged the Portland aluminium smelter in Victoria, have shown the damage that intermittent and unreliable wind and solar energy is doing to our power supply.
There’s no doubt that climate change obsessions have played havoc with Australia’s energy policy. Fifteen years ago, thanks to a largely privatised and de-regulated energy market, our power prices were amongst the world’s lowest. With the world’s largest readily available reserves of coal, gas and uranium, we were an affordable energy superpower. Since then, climate-induced political fiddling has put prices through the roof and removed Australian manufacturing’s one big comparative advantage. It’s damaged our standard of living and it’s destroyed thousands of jobs.
My government scrapped the carbon tax and reduced the renewable energy target but the preference given to wind and solar power continues to drive coal and gas fired power stations out of business and to put security of supply at risk. Depending on conditions, wind varies between providing nothing and everything that South Australia needs. Because of wind’s preferential status and minimal marginal cost, more reliable and cheaper-overall forms of power generation simply can’t compete. SA’s private Pelican Point gas-fired power station is currently mothballed because policy-driven market distortion and Greens-driven restrictions on gas supply have made it uneconomic. Meanwhile, renewable energy-obsessed Labor governments, dramatically increased coal royalties, and political risk have made coal-fired power unbankable here even though it’s still the most affordable and reliable source of energy.
If price rises are to moderate and if jobs are to be preserved, energy policy needs a complete re-think. The renewable energy target, in particular, needs to be reconsidered so that unreliable power is no longer shutting down the reliable power everyone needs. As always, it’s the unintended, unanticipated consequences of well-intentioned policy that turn out to be the most significant. The dream of “clean, green” wind and solar power over “dirty, dangerous” coal – and the subsidies to bring it about – has led us to the verge of catastrophe.
Once Hazelwood is gone, the plant mothballed and the workforce dispersed, it will be almost impossible to reopen. Meanwhile, all the other schemes to produce large amounts of coal-free base load power are years and years from fruition. At least until Snowy 2.0 can produce 2000 megawatts of cost-effective and drought-proof hydro power, Hazelwood should stay open. This wouldn’t be baling out a failing business. It would be securing the services that Australians need until market forces are once more driving the system.
Keeping Hazelwood open would be a good way for Prime Minister Turnbull to show that energy policy in Australia won’t be hijacked by ideological fixations in France. One of the factors in its looming closure – not the only one but an important one – is the French socialist government (which part owns Engie, which part owns Hazelwood) wanting to boast that it has closed down one of the world’s “dirtiest” power stations.
Keeping Hazelwood open would cap off a good week for the Prime Minister. He’s fought for free speech, announced a new crack down on union corruption, and released an “Australia First” citizenship statement. Stopping next summer’s looming blackouts with bold action now is a chance to keep the momentum.