Briefing Note | February 2021

Closing coal

Key Points

There are 23 operating coal fired power stations in Australia, and 18 in the National Electricity Market. Coal provided 69 per cent of electricity in the NEM in the first half of the 2020-21 financial year.
These power stations were commissioned since the early 1970s and will close progressively over the next 30 years, unless closed earlier by government policies.
The way coal fired power stations close and the timing of each closure, will be critical to a reliable transition to lower emissions generation.
The main drivers for coal generator closures are commercial, age or regulation.
The relatively sudden closure of two large generators in South Australia (Northern, 2016) and Victoria (Hazelwood, 2017) resulted in spikes in the wholesale electricity price and increased reliability concerns.
This type of closure should be atypical in the future. Coal fired generators are made up of units which can, if managed correctly, be closed more gradually.
Flexibility may be needed around the closure of each generator, either to bring forward closure or to extend operations or in the event of a supply shortage.
A mandatory three-year notice period for the closure of coal power stations was introduced in 2018 and extended to 3 ½ years in 2019. It can still be circumvented by practical events like fuel constraints or safety notices.

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