Hazelwood, Victoria's biggest coal-fired power station, is closing in 4 months

The Hazelwood Power Station. Photo by Hamish Blair/Getty Images

French energy giant ENGIE has announced it will close Victoria’s massive Hazelwood power station just four months, in March 2017.

ENGIE said it’s also looking at putting its remaining two power assets in Victoria, Loy Yang B coal power station and Kwinana gas power station, on the market.

While one of the cheapest electricity producers in Australia, the Hazelwood brown coal-fired station was also considered the nation’s – and one of the world’s – biggest pollution emitters. It is also one of the Latrobe Valley’s biggest employers, with 750 staff and contractors, in an area of high unemployment. The company says 250 people will stay on after the closure to manage the decommissioning and rehabilitation.

The station spends around $100 million annually on local wages.

But in a statement released today, the ENGIE said Hazelwood “has been operating in difficult market conditions, with lower electricity prices and a surplus of electricity supply in Victoria”.

CEO Isabelle Kocher said the company is now focusing on wind and solar energy production and remains committed to the Australian market, but has a strategy to end coal-based activities.

Built in the 1960s, Hazelwood produces up to a quarter of Victoria’s base load electricity and 5% of the national demand. The plant and adjoining mine were sold to a foreign consortium by the state government 20 years ago with a 40-year life. Details of its premature closure have been expected for some time.

While the Australian Energy Market Operator believes the nation has the capacity to reduce supply by at least 7500 megawatts – Hazelwood produces 1600Mw – before supply is affected, analysis for the Victorian government predicts that power prices in the state could rise between 4% and 8% with Hazelwood’s closure.

NSW is also a key user of Victoria power, taking around 15% of its energy from cross the border.

The Victorian government pledged $40 million in its last state budget to assist the Latrobe Valley as it begins to transition from coal-based power.

In 2014, Hazelwood became notorious for a 45-day coalmine fire, which saw parts of the surrounding towns evacuated, and led to a major health inquiry amid a bitter political debate about whether pollution from the fire contributed to the deaths of several residents.

Here is the company’s statement:

ENGIE in Australia announces it will close Hazelwood coal power generation station and the adjoining mine, in the State of Victoria, Australia. The closure will be effective at the end of March 2017.

The closure of Hazelwood is in line with ENGIE’s strategy to gradually end its coal activities. This is laid out in the Group’s transformation plan that aims at concentrating solely on low-carbon projects for power generation, renewable energy and natural gas. In 2016, ENGIE has already sold or closed coal assets which represent more than 5 GW of capacity.

Besides, Hazelwood power station has been operating in difficult market conditions, with lower electricity prices and a surplus of electricity supply in Victoria State.

“As a responsible actor, we are committed to supporting our employees and to work now on the rehabilitation of the site, in close cooperation with all our stakeholders. ENGIE will remain an important actor in Australia. With more than 1,500 employees, we will continue our development towards low carbon activities”, said Isabelle Kocher, CEO of ENGIE.

The 1,600 MW power station has produced electricity from coal, extracted from the adjoining mine, since the 1960s. It employs 750 people, including 450 ENGIE employees and 300 contractors. Post closure, up to 250 people will be required to manage the power station decommissioning and mine rehabilitation.

ENGIE also announces today that it is studying the possible sale of two of its power production assets in Australia: Loy Yang B coal power station and Kwinana gas power station.

ENGIE has a strong presence in the energy industry in Australia through its gas and wind-generating assets in South Australia, with a total of 2 GW of capacities. It is also developing or contracting wind and solar power generation across Australia.

Simply Energy, its energy retailer, is approaching 600,000 electricity and gas accounts following organic growth of 75% during the last four years and is continuing to expand into the photovoltaic and battery storage market, while ENGIE Services develops cost-saving smart energy services and facilities management.

NOW READ: Why you shouldn’t worry about power prices if Victoria’s biggest coal-fired station closes down

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