By Andrew Bolt ~
What is Malcolm Turnbull’s “significant win” here? What has AGL really agreed to?
Malcolm Turnbull has struck a deal with power giant AGL to prevent a looming energy shortage by extending the life of a vital coal-fired power station for five years, unless the company drafts a plan within 90 days to install new generators to take its place.
The Prime Minister ended a meeting with AGL chief executive Andy Vesey with a commitment from the company to avoid the forecast market shortfall that is fuelling fears of higher prices and potential blackouts when the company closes its Liddell coal power station… The agreement is a significant win for the government…
Malcolm Turnbull has struck a deal with power giant AGL to prevent a looming energy shortage by extending the life of a vital coal-fired power station for five years, unless the company drafts a plan within 90 days to install new generators to take its place.But all that AGL really agreed to do was to make a decision, without promising what that decision would be:
“I was asked to take to the AGL board the government’s request to continue the operation of Liddell post-2022 for five years and/or sell Liddell, which I agreed to do,” [AGL boss Andrew Vesey] said in a statement.
Yes, there was also this:
Yesterday’s talks followed a warning from the Australian Energy Market Operator last week on the need to develop at least 1000 megawatts of new electricity capacity by 2022 to make up for the scheduled closure of the NSW power station.
Mr Vesey said the company had committed to deliver a plan in 90 days to avoid the market shortfall, but he made it clear that he could proceed with the closure of Liddell if the company invested in alternative forms of generation.
So Liddell’s output will be replaced by other output, just as cheap?
Er, not quite:
Mr Vesey said the likely replacement for coal-fired power would be gas power, pumped hydro, batteries or “load-shaping” to reduce demand.
Gas power is more expensive than coal. More importantly, batteries and pumped hydro just store power, they do not generate it. And reducing demand is not increasing supply.
Such “demand management” could cost us more for less:
This involves bribing consumers and businesses to use less electricity when told to do so and in exchange receive some monetary compensation. It’s a bit like BHP telling its customers to demand less iron ore and BHP will pay its customers for doing so. Oh that’s right, BHP would never do that because that’s not how market economics works.
We need a lot more detail here before we talk of a “significant win”.
UPDATE
AGL exposes the spin within hours of the “deal”.
Energy company AGL has blinked [sic] in the face of sustained pressure from the Turnbull government over the future of the Liddell coal-fired power plant, asking for 90 days to come up with a proposal to keep the plant open, sell it – or deliver equivalent power into the market.
After a 90-minute meeting in Canberra between Mr Turnbull, Energy Minister Josh Frydenberg and AGL chief executive Andy Vesey over the future of the plant, Mr Frydenberg said the company had indicated it was ready to back down from its plan to shut Liddell in 2022.
It did?
AGL Energy chief executive Andy Vesey says building coal-fired power stations is no longer “economically rational”, committing to deliver a coal-free plan to avoid a market shortfall when AGL closes the Liddell coal-fired power station in NSW in 2022.
In doing so, Mr Vesey has implicitly rejected the federal government’s calls for the company to extend the life of the ageing Liddell or sell it to someone who will, after being hauled to Canberra yesterday to meet with Malcolm Turnbull.
“Following today’s meeting with the Prime Minister, we have committed to deliver a plan in 90 days of the actions AGL will take to avoid a market shortfall once the Liddell coal-fired power station retires in 2022,” the AGL boss said last night.
“I was asked to take to the AGL board the government’s request to continue the operation of Liddell post 2022 for five years and/or sell Liddell, which I agreed to do,” he said.
The board has no doubt considered whether to sell or extend the life of Liddell many times…
“In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost.””
UPDATE 2
Judith Sloan says something stinks with AGL’s claim that it is “getting out of coal” to fight global warming:
Surely a company that derives over 90 per cent of its profits from coal and gas can’t portray itself as green as grass.
Andrew Bolt writes for the Herald Sun, Daily Telegraph, and The Advertiser and runs Australia’s most-read political blog. On week nights he hosts The Bolt Report on Sky News at 7pm and his Macquarie Radio show at 8pm with Steve Price.
Read more excellent articles from Andrew Bolt’s Blog . http://blogs.news.com.au/heraldsun/andrewbolt/
