September 2, 2021
Electricity price hike threatens millions
Australian household power bills will jump by hundreds of dollars if ageing power plants are paid to remain open.
Australia’s coal and gas-fired power stations are set to receive billions in subsidies from households to continue pumping out greenhouse gases.
Homeowners will see their power bills jump by hundreds of dollars a year if they’re forced to pay coal and gas plants to keep running.
A report by the Institute for Energy Economics and Financial Analysis (IEEFA) and Green Energy Markets warns households could face power bills of $182 to $430 more a year if a new proposal goes ahead.
Their report criticises a proposal by the Energy Security Board (ESB) to introduce capacity payment to the National Electricity Market.
The National Electricity Market (NEM) spans Australia’s eastern and south-eastern coasts, connecting five states (and the Australian Capital Territory) with electricity via thousands of kilometres of transmission lines. NEM connects every state and territory except Western Australia and the Northern Territory.
Renewable energy
The ESB says it’s concerned about the speed with which renewable energy providers are entering the electricity network and has recommended paying ageing power plants to stay open — even if they’re not providing power — in case they’re needed during extreme demand peaks in coming years.
Such payments would ensure the system had the capacity to meet any demand and avoid potential blackouts, without suffering from the sudden withdrawal of ageing coal plants as the network evolved towards lower emissions.
Electricity analysts say the ESB proposal will see consumers paying extra money to bail out ageing power generators for little benefit.
Extra power capacity
While several coal power plants are facing financial difficulties, analysts find that power reliability is not threatened by coal power plants closing down over the next 10 years.
Extra power capacity to avoid blackouts is now available from hydro, batteries, bioenergy, gas and existing coal power plant upgrades.
From 2017 to 2027, almost 6,500 megawatts of additional capacity is being added to the grid.
This is almost double the capacity that will be lost from the next three coal power stations due to close — Yallourn, Callide B and Vales Point B.
This means that all states across the NEM have enough power capacity for the next decade to meet the strict reliability standard of satisfying more than 99.998 percent of demand.
Ageing power plants
But while renewable energy generators such as wind and solar provide large amounts of energy to the system, ageing coal and gas power plants run at a loss, threatening their viability.
The ESB has recommended introducing capacity payment to the market. This would see energy retailers paying additional money to conventional power plants based on the size of the installed capacity of their generators, rather than the power they actually provide.
According to analysts, the cost of household power bills would rise by between $2.9 billion to $6.9 billion every year.
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