July 3, 2017 - A new report has backed the viability of high efficiency low emission (HELE) coal generation and its potential contribution to Australia’s energy mix.

The independent report, released by the COAL21 Fund and the Minerals Council of Australia, examines the cost of building new HELE plants in Australia and the implications for wholesale electricity charges.

It 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.

A key finding in the report came from contributor, GHD, which estimated a current construction cost of $2.2million/MW (or $2.2 billion for 1000 MW capacity) for a modern HELE or ultra-super critical (USC) black coal plant based on savings accrued from utilizing a brownfield site and sourcing specialized 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 aging coal fired power stations,” COAL21 chief executive officer Greg Evans said.

“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.”

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 can lower the cost of generation across the National Electricity Market (NEM) given current wholesale electricity prices.

It concludes that the imminent retirement of coal plants in New South Wales and Victoria provides opportunities for constructing and replacing them with USC plants by the early 2020s.

Additional capacity may also be required in Queensland in the medium term under a higher economic growth assumption.

The report also points out that VRE sources cannot deliver system strength, inertia, and voltage control essential for a stable grid.

“This means variable renewable energy (VRE) integration would only be possible when accompanied by fast- reacting, mid-merit, fossil-based technologies such as HELE which provides readily available back up capacity to hedge against the variability and lack of strength of VRE generation,” Evans said.

Replacing the existing coal fleet with HELE technology would save 44.2 million tonnes of CO2 or over 25 per cent of National Electricity Market coal generation emissions, according to the report.

“Coal-fired generation is the cheapest and most reliable electricity source in Australia available 24 hours a day, every day. Australia has access to the highest quality coal in our own backyard and the rest of the world pays a premium to use it,” Evans said.

“There is little sense in not utilising coal for our own electricity generation when HELE technologies are affordable and reliable and will help reduce emissions.”

The report confirms that USC coal plants should continue to figure prominently in our electricity system, complementing and supporting other technologies including renewables, Evans concluded.