Payment for closure is out the window---- great for ESI / Coldry!!! .
The government had said it was prepared to pay directly in cash to cause closure of around 2000MW capacity of power plant capacity from the brown coal power plants
A payment to close any specific capacity; would only increase the cost of meeting the target; in this case closing the plants of around 2000MW was going to cost a fortune; in the same way that payment to add any specific capacity, such as gas powered or renewable energy, does the same thing.
So closing of a brown coal belcher would cost a fortune and rebuilding new gas powered station would cost an absolute fortune to and remember there would be a need more multiple closures and new constructs.
The cost of production at Yallourn is $6-7 per megawatt hour; the power station emits 1.4 tonnes of CO2 per MWh, so it is up for $33 of tax per MWh; total cost $39-40. The marginal cost of gas is around $28 per MWh and it emits about 0.35 tonnes per MWh of CO2; therefore total cost is (with the carbon tax at $23 per tonne)$36 ($28 plus 0.35 times $23), which is less than brown coal.
That's the purpose of a carbon tax or cap and trade scheme – to change the economics of electricity generation so that less carbon intensive production is dispatched into the National electricity market; but there is a bit of problem; as you see from the calculation above there is only a cost difference of $3-$4 difference per MWH between brown coal and gas with a carbon tax price at $23. There is no confidence in the long-term supply of domestic gas in Australia since virtually all of what’s available has been committed to export contracts..........legislating for gas to be set aside for domestic would just send the price through the roof!! Then your cost plus difference for the cost per MWh in favor of gas over brown coal would most likely turn negitive....... It's a thin line; too thin considering the cost of closure and rebuild associated with it. If you run a reduced carbon tax ; say to $15 per tonne (1.4t x $15 plus $7 mwh coal) plus cost of production =$28 mwh through coal; note the marginal cost of gas..... It's $28 alone plus 0.35t x $15 resulting in a figure of $33.25 per mwh through gas.... well we can easily see that the reduction in carbon tax favours coal no doubt; it's cheaper and no closures or rebuilds to factor in.
So with the cost of carbon where it was at $23, considerably higher than euro; the cost to shut, open and then be under the treat of a increase gas cost tipping the scales into negitive..... Well you could well have higher cost of energy at then end of it; a shot in the foot. The cost of cutting emissions would have far exceeded the cost of $23 per tonne carbon price. Carbon tax would need to increase to get gas through the door; carbon tax is going the opposite..... Gas powered plant plans are dead for now. Solar and wind power ( renewable energy ) is the most expensive and the most unreliable full stop.
As many of the reports say - 'The coal plant buyout was supposed to accelerate investment in cleaner energy sources such as gas and renewables' ............ Coldry / BCE is neither of those. If the carbon price had of risen , brown coals days were numbered; it's done the opposite.
Just two weeks prior to the backflip on the carbon tax ; the goverment makes available $90m which will fund development and deployment of emerging technologies to improve the economic recovery of brown coal and reduce emissions from coal-fired electricity generation.
They can apply for competitive grants programs to pay for measures that would reduce their emissions.
Hazelwood received $266 million, Yallourn pocketed $257 million, Loy Yang Power got $240 million and Loy Yang B received $117 million help coal-fired generators cope with the carbon tax Mid this year.
Tony Abbott now insists his Direct Action policy never envisaged the closure of brown coal power stations, but only their "cleaning up". But that isn't what the Coalition used to say. Until July last year Mr Abbott's shadow ministers were certainly talking about paying to close brown coal fired plants and build gas fired plants in their place.
He now says We've never wanted to shut down perfectly good businesses that are employing hundreds in some cases thousands of people.
IMO the goverment, weither current or challenging have work up to moo of the cash cow that stands in the Latrobe valley. Those 4 plants in the valley will be burning converted LV coal to BCE / coldry for some time to come and in the very near future and ship loads of BCE will start to roll out of the shipping ports. I seriously doubt if BM coal will be used for domestic burn due to its poor quality; but both BM and LV will be exported.
Coldry will clean up those stations for a fraction of the price; it will also increase the efficiency of those stations, the stations will also gain carbon credits for the implementation; jobs saved, jobs created.
What would be the point in having new / converting these plants in the valley to gas; having to bring all that gas to the plants whilst all the BCE is driving out the gates and onto the ships to foreign shores????? Absolutley zero
Reduced carbon emittions, Jobs and more jobs, Far less cash spend and billions made.......
Gas & renewable energy...... Not whilst there is still a bag of coal in the valley IMO.
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