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Independent report backs modern coal generation for Australia

Published by
World Coal,

In the most detailed report of its type, comprising 550 pages, energy sector specialists from Solstice Development Services and power sector engineers GHD have examined the cost of building new HELE plants in Australia and the implications for wholesale electricity charges.

The report considers this against the backdrop of coal plant closures expected over the next two decades due to ageing assets while recognising the need to ensure the most affordable and reliable technology is adopted as a replacement.

Importantly the report authors reviewed and costed different technology options that are capable of replacing retiring capacity. These were considered on their merit using a range of sources cross checked against published studies and their respective assumptions.

  • GHD estimate a current construction cost of AUS$2.2million/MW (or AUS$2.2 billion for 1000 MW capacity) for a modern HELE or: ultra super critical (USC) black coal plant based on savings accrued from using a brownfield site and sourcing specialised equipment from Asia.

This demonstrates that HELE coal plants – which would have operating lives of several decades – are viable and affordable options for replacing Australia’s existing ageing coal fired power stations.

The study also reviewed wholesale electricity costs for different technologies expressed on a long run marginal cost (LRMC) basis, using a consistent methodology to allow comparison. Based on provision of a 650 MW stand-alone power station capable of producing at least 2 to 3 days of electricity independent of the weather, the study found:

  • USC black coal is the lowest cost generation option at AUS$40 - AUS$78 per MWh in (2017 prices) on a LRMC basis.
  • Other synchronous generation had higher wholesale costs, including combined cycle gas at AUS$69- AUS$115 per MWh and open cycle gas at AUS$179 - AUS$430 per MWh.
  • Variable renewable energy (VRE), which is not available 24 hours a day, also has higher costs, including solar at AUS$90 - AUS$171 per MWh and wind at AUS$64 - AUS$115 per MWh. At assumed average capacity factors of 20% and 37% respectively for solar and wind, these technologies are not only more expensive but unsuitable without ‘firming’ or back up generation to emulate baseload performance.
  • An option to firm VRE includes combining wind or solar PV generation with batteries:
  • In the case of wind and batteries, and to allow for the equivalent to baseload generation available for 24 hours per day over a two to three day period, its LRMC rises to AUS$211-AUS$693 per MWh. This is more than eight times the cost of high range USC black coal.
  • The high range battery cost estimate implies a capital cost of almost AUS$27 billion for a 650 MW equivalent plant capable of delivering dispatchable power for three days.
  • By contrast, the cost of wind generation firmed with USC black coal to provide constant supply is a LRMC of US$75-US$121 per MWh.
  • The report also identifies the longer term opportunity for viable Carbon Capture and Storage (CCS) options. USC black coal with CCS is costed at AUS$69-AUS$165 per MWh and wind with USC black coal and CCS would cost AUS$88-AUS$196 per MWh.

The report confirms that USC coal generation can deliver on the priorities of affordability, reliability and low emissions. It notes electricity prices paid by manufacturers have doubled in the past decade and that USC coal is able to lower the cost of generation across the National Electricity Market (NEM) given current wholesale electricity prices.

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