Alinta Energy boss calls for bipartisan approach to energy policy

Yesterday’s article in the Sunday Herald Sun covered the call from Alinta Energy Chief Jeff Dimery for political bipartisanship on energy policy.

The article highlights Dimery’s position on the current issue:

“Ideologically the parties can’t agree but we need to find a middle ground … We don’t want to be investing in a 25-year project only for the policy to change six months later.”

Underlying the political stalemate is the lack of investment confidence, with the scrapping of the clean energy target meaning the end of subsidies for new wind and solar, removing the incentive to invest.

According to the article, the closure of Victoria’s brown coal-fired Hazelwood power station in March was the result of the $400 million price tag needed to upgrade the 52-year old plant. The outcome was the sudden, unplanned loss of 25% of Victoria’s baseload capacity in one hit, leading to a spike in power prices.

Mr Dimery goes on to note that despite rising prices, the Chinese-owned, West Australian-based Alinta Energy is about to deliver its customers a price decrease of 2.8 percent.

And this is the interesting part.

What has allowed Alinta to deliver a price drop when AGL, Origin and others have recently increased their retail prices by around 9 to 10%?

Simply, the addition of brown coal power generation to the Alinta portfolio via the acquisition of Engie’s Loy Yang B power station in Victoria for $1.2 billion last month.

Our thoughts?

Commissioned in between 1993 and 1996, Loy Yang B is the youngest of Victoria’s brown coal power stations with a capacity of 1,050 MW, supplying around 17% of Victoria’s power. Brown coal costs around $5 a tonne to mine. It’s cheap.

With the exit of Hazelwood, the remaining brown coal generators; Loy Yang A, Yallorn and Loy Yang B have been running at above-average utilisation of around 90%, providing reliable power.

But, even with that high utilisation, we’ve had regular demand periods that exceed our generation capacity, requiring imports from other states. We were a net electricity exporter before Hazelwood closed.

The average wholesale price of electricity in Victoria for 2017 was $95.15/MWh, up from $46.14 in FY16 and $66.58 for FY17. The base cost of brown coal generation remains relatively low-cost at around $35-$40 per MWh.

Tidy margin!

Read more…

 

Political confusion on power policy costing us dearly

Sunday Herald Sun | 9 December 2017 | Peter Drill ($)

POLITICAL fighting is to blame for high power prices, an energy boss says.

Alinta Energy chief Jeff Dimery has demanded that both sides of politics come up with an agreement on carbon pricing so the industry can invest in new technology of coal-powered electricity generation.

“What we need is stable and bipartisan energy policy,” Mr Dimery said.

“Ideologically the parties can’t agree but we need to find a middle ground … We don’t want to be investing in a 25-year project only for the policy to change six months later.”

Source: Political confusion on power policy costing us dearly | Herald Sun