Wednesday, 23 May 2018

What to do about AGL closing Liddell

Anthony Cox

Vesey, the US economic immigrant controlling most of Australia’s electricity supply through AGL has rejected an offer by Chinese company, Alinta, to buy Liddell which Vesey plans to close down in 2022 and therefore increase the profitability of the dud renewables he is getting subsidised to build.

Frydenberg has said on behalf of the witless Turnbull government that this closure of Liddell will produce shortfalls in dispatchable power, as if he knows what that means. Frydenberg also says he and Turnbull can’t do anything about the planned closure.

In fact, both the Turnbull’s government and the NSW state government can do a lot to spike Vesey’s destructive plan.

The NSW government gave AGL Liddell for nothing in the 2014 sale. A number of points about this:
1 Some commentators say the sale was for more than zero because AGL would have to pay up to $950 million in site rehabilitation costs. However, AGL is receiving vast subsidies for its renewables, tax write-offs for Liddell and hugely inflated electricity profits. These would mitigate and off-set any remediation expense.
2 AGL itself boasted it received Liddell for nothing as Jo Nova noted:

3 Alinta’s offer of $250 million includes an undertaking for them to pay for the remediation costs.
4 Remediation costs would be a tax offset for AGL.
5 The resale value of coal plants is now extremely high. Vales Point, another coal plant was sold in 2014 by the witless NSW government for $1 million. Vales Point is now up for sale for $730 million. The point is how much does Vesey expect to receive in government subsidies after he sells Liddell which is worth more than Vales Point if he is prepared to close Liddell down?
6 Vesey claims to keep Liddell open will cost AGL $920 million. But as the former chairman of MacGen explains they spent $30 million on Liddell modernising it before the witless NSW government forced them to sell give away Liddell setting it up for another 20 years of service. Who would you believe?
7 Vesey also claims there will be no shortage of power due to this replacement of Liddell with renewables and batteries. But his own table proves this to be ridiculous:

Look at Stage 1 solar, Stages 2+3 renewables and Stage 3 Liddell Battery. All have a potential to produce zero or close to zero power. We know when the sun doesn’t shine and the wind doesn’t blow wind and solar are useless and batteries don’t produce power so when there is no sun or wind there will be no power in the battery. By his own optimistic estimates, there will be a shortfall of 260 MW and if no wind or solar that will be another 1100 MW. This is madness.

So, what can the Turnbull and the NSW governments do?

All state governments have Essential Services legislation. In NSW it is the Essential Services Act 1988. Electricity is an essential service. We know if Liddell is closed there will be power shortages. Under the legislation, NSW can stop AGL from closing Liddell or even commandeer Liddell to ensure there is electricity supply. A much more preferable result then rotating blackouts or forced reduction of demand as we saw with petrol rationing during the Middle East crisis.

The Turnbull government solution is even simpler. Cease all subsidies to renewables immediately. In that environment, despite being a greenie Vesey won’t dare close a profitable coal plant for non-subsidised renewables.

All it would require is government will and support for the citizens. Fat chance.