Transition plan slam

Power to delay coal shift dilutes price signals: Alinta

Alinta Energy says proposed new powers allowing states to delay closure of coal power stations amount to unjustified intervention in the market that would be counterproductive to efforts to transition to renewables and cut emissions.

Australia is grappling with how to rapidly wean itself off fossil fuels without harming its $2.5 trillion economy. But there is growing concern about a lumpy and damaging transition as new renewable energy sources struggle to materialise while plans to shutter coal – still the dominant source of electricity – are moving at pace.

Such is the alarm that the Australian Energy Market Operator last year said the country would need to rapidly accelerate development of new zero-emission sources or face a decade of unreliable electricity supplies, which would evaluate the risk of price rises and blackouts

The federal Labor government and its state counterparts are considering a scheme that would give those that opt in powers to amend the closure dates, known as the orderly exit management framework (OEMF). Currently

owners and operators of coal power stations simply have to give a notice period of 3½ years before closure.

The plan has attracted strong opposition but Alinta Energy offered an escalation of the criticism in language rarely seen in feedback to proposed policy.

Alinta said the OEMF would be counterproductive, potentially be susceptible to politically motivated intervention and governments were not qualified to determine whether the exit of a coal power station would leave a reliability shortfall.

“Alinta Energy strongly opposes the introduction of additional mechanisms, such as the OEMF, that would impose additional regulatory burden, increase uncertainty for investors by destroying any last potential for investment decisions to be based on price signals, lead to increased costs for participants and ultimately impose higher costs on consumers, without a clearly identified gap in regulatory arrangements,” the retailer said.

The sentiment was shared by others, including AGL Energy, Australian Energy Council, which represents electricity and gas companies, and the Clean Energy Council.

EnergyAustralia – the country’s third largest electricity and gas retailer – said the OEMF would need to be tweaked, though the company insisted it supported the objectives of the policy.

Chief executive Mark Collette has been a vocal advocate for a managed exit, and Victoria has already begun to act.

Victoria has struck secret deals with AGL and EnergyAustralia to ensure the state’s two largest coal generators stay open.

AGL’s Loy Yang will now stay open until 2035, while EnergyAustralia’s Yallourn generator will close in 2028.