Western Australia invests A$3.8 billion to manage coal to renewables-plus-storage transition

A joint statement was issued on Tuesday (14 June) by state Premier Mark McGowan and Minister for Mines, Petroleum and Energy Bill Johnston which outlined a A$3.8 billion (US$2.66 billion) investment plan and gave retirement dates for the two plants, Collie and Muja.

Collie is closing in late 2027 while some of Muja’s units will go offline this year, more in 2024 and the remainder before the end of 2029, the statement said.

The A$3.8 billion investment – at present the figure is an estimate – will largely go towards upgrades of the Australian southwest’s grid network, the South West Interconnected System (SWIS).

Calling it “one of the biggest infrastructure investments ever seen in Western Australia,” premier McGowan said it represents “investment in renewable energy and energy storage” which will thousands of jobs in regional Western Australia (WA).

A transition package worth A$547.4 million is being committed to help the town of Collie grow industries and create local jobs as the coal plant that has long been at the heart of its economy retires. The Collie Transition Package will support Collie over 10 years, including a A$200 million Collie Industrial Transition Fund.

Rooftop solar growth triggers ‘extraordinary investment in system’

The current status quo for Western Australia is that the uptake of rooftop solar is so fast that energy minister Johnston said the equivalent of a new coal power plant unit is being added every year to the grid.

However, this is creating a significant excess in generation capacity that state-owned utility company Synergy is forced to offload at a loss, at the same time incurring maintenance and other fees which are paid by the taxpayer.

If the coal plants were to be kept running, costs to the taxpayer would see an average bill rise of between A$1,800 to A$3,000 per year, with a total of about A$3 billion required to cover losses Synergy would make by the 2029-2030 timeframe.

The coal phase-out would also decrease Synergy’s emissions by 80% by 2030 and a 40% emissions reduction across the SWIS, the government claimed.

Synergy and the state’s Water Corporation are currently considering options including pumped hydro energy storage and hydrogen as a drop-in replacement for natural gas.

In the short-term, the government has said it will continue to reserve 15% of the state’s natural gas that would otherwise be exported as a planning margin. It has however said it will not build any new gas facilities after 2030.

The growth of rooftop solar is putting “unprecedented pressure on the system,” forcing the government to take action, Johnston said.

“Our new investment in the South West Interconnected System represents an extraordinary investment in the future of our electricity system, including a massive reduction of Synergy’s carbon emissions,” Johnston said.

“Western Australia will implement a sensible, managed transition to a greater use of renewables for electricity generation, while ensuring we maintain electricity reliability as a priority,” McGowan said.

A report just published by the Australian Energy Market Operator (AEMO), found that electricity supply should be able to meet expected demand in Western Australia until at least 2025, although it expects a shortfall of around 21MW by 2025-2026 as Muja’s retirement picks up pace.

This could grow to about 303MW by the beginning of the 2030s if no new capacity additions were committed to AEMO said, although it noted in a statement today that these figures were calculated and published ahead of the WA government investment announcement.

In April, Energy-Storage.news reported that the state government was funding a feasibility study for a battery energy storage system (BESS) project in Collie with capacity of between 600MWh and 800MWh.

At the time, Minister for Regional Development Alannah MacTiernan said the project would “provide a firm basis to progress a renewable energy hub in Collie”.

This followed the award by Synergy and the WA government of a 100MW/200MWh BESS project at the site of Kwinana, a decommissioned co-generation thermal power station in the state, in October 2021. Italy-headquartered NHOA, a subsidiary of Taiwan Cement Corporation, was awarded the contract.

The latest news comes as Australia’s energy markets continue to be in a crisis, with spot market trading suspended this week in the National Electricity Market (NEM) which covers most of the country. This is thought to be largely caused by supply shortfall in two states, Queensland and New South Wales, triggering volatility across the NEM.

Meanwhile, the economic competitiveness of coal continues to be eroded by changes in the NEM which favour fast-responding and inverter-based technologies such as wind, solar and battery storage, leading to coal plant operators seeking clarity from the Federal government on timelines for closures.

This has come amid a wave of cautious optimism that the new Labor government led by Prime Minister Anthony Albanese, elected on a platform that included promises of strong action on climate, will tackle fossil fuels.

Eraring in New South Wales (NSW) is the country’s biggest coal plant. It is set to be replaced with a combination of large-scale battery storage and distributed renewables. Its owner, Origin Energy, wants to retire the plant by 2025 and the NSW government was prompted to make its own pledge of A$1.2 billion investment into infrastructure to support huge Renewable Energy Zones (REZ) in the state.

The first recipient of that NSW government funding will be Waratah Super Battery, a 700MW/1,400MWh which will act as a “shock absorber” for the transmission network.