Federal Politics

'Clean coal' would push up power bills more than wind, solar or gas: analysts

"Clean coal" plants that the Turnbull government has flagged could get clean energy subsidies are more expensive than solar, wind and gas-fired power and would lead to higher electricity price rises, analysts have warned.

Support for what the government calls "clean coal" stations - ultra-supercritical plants, which still emit greenhouse gas - would also be at odds with a 2015 OECD agreement under which Australia agreed not to fund any type of coal power in developing countries if cleaner options were available.

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'Clean coal' makes a comeback

New technology means coal will play a role in electricity generation long into the future, says Malcolm Turnbull. Courtesy ABC News 24.

An analysis by Bloomberg New Energy Finance released on Friday found this type of plant was the most expensive and dirtiest source of mainstream electricity supply available.

Across their lifetime, the most efficient modern coal plants would cost a minimum $134 per megawatt hour of electricity generated, and possibly as much as $203.

Wind ($61-118 per megawatt hour), baseload gas ($74-90) and large-scale solar ($78-140) were much cheaper.

The analysis found the cost of building new coal could fall to $94 per megawatt hour if the government were to take on all risk across its decades-long lifespan.

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That would either require taxpayers to fund a multi-billion dollar plant outright, or the Coalition to guarantee that Canberra would cover all costs over coming decades should future governments introduce carbon policies to meet Australia's international climate commitments.

In a separate analysis, the Climate Institute estimated the guarantee necessary would be equivalent to $0.9-$1.5 billion a year. For a plant the size of Hazelwood in Victoria, it would mean $27-45 billion over 30 years.

Bloomberg New Energy Finance Australian chief Kobad Bhavnagri said if new coal were to be built in Australia, electricity prices would be substantially higher than under a combination of gas and renewables – assuming governments opened up gas markets so supply was readily available.

"New coal is not cheap, it's inflexible and unnecessary and it's certainly not clean," Mr Bhavnagri said. "It's impossible to imagine a private market participant investing in such a project."

In the wake of a South Australia-wide blackout during an extreme storm in September, government ministers have stressed the need for Australia's electricity supply to be reliable and affordable as the country meets emissions targets.

In a speech to the National Press Club on Wednesday, Prime Minister Malcolm Turnbull said Australia needed more baseload power and had a vested interest in developing "state-of-the-art clean coal-fired technology".

It's impossible to imagine a private market participant investing in such a project.

Kobad Bhavnagri, Bloomberg New Energy Finance

Calling for a "technology agnostic" approach, he also announced funding for large-scale energy storage and flexible generation projects such as pumped hydro-power, called on Labor states to lift bans on gas exploration and criticised the opposition's uncosted target of 50 per cent renewable energy by 2030.

Australia's leading energy companies this week rejected the idea they would invest in new coal stations. Energy Australia noted financiers saw coal as a legacy technology in the process of being replaced.            

But several ministers entertained the possibility that coal plants could be funded by the Clean Energy Finance Corporation. Resources Minister Matt Canavan said the $5 billion Northern Australia Infrastructure Fund would be opened to coal applications.

In November 2015, Australia signed up to an OECD (Organisation for Economic Co-operation and Development) agreement to limit public funding of coal plants in developing countries.

Under the deal, 34 OECD members agreed proposals for export credit agency funding would be assessed to see if they were the cleanest alternative available and whether they were consistent with the country's climate change plan.

Despite being described as "clean", modern black coal plants emit about 0.7 tonnes of carbon dioxide for every megawatt hour generated – 10-to-25 per cent less than existing plants, but about twice as much as baseload gas. Wind and solar generation are emissions-free.

In brown coal-rich Victoria and South Australia, it has been estimated a new plant would at best have an emissions rate of 0.93, higher than some black coal plants operating today.

The International Energy Agency found delivering on the Paris climate deal would require developed countries to have phased out coal generation by 2035.

On reliability, the analysis found coal plants were an inflexible form of generation not suited to a modern power grid drawing electricity from a range of sources, including intermittent renewable energy and battery storage.

Baseload gas can start and stop much more quickly than coal, which basically needs to run constantly, even when not required. Gas plants also have shorter lifespans, which reduces the investment risk.

Australian Energy Council chief Matthew Warren said Australia urgently needed a national plan that allowed the industry to invest in the new power plants needed.

"These are long-life assets and the risk is you make things worse if you don't have a plan," he said.

"I don't think the banking sector and the industry are looking to build coal-fired power stations for the foreseeable future." 

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