Malcolm Turnbull is trying to find a buyer to keep a major coal-fired power station open

Photo: Ian Waldie/ Getty Images.

Prime minister Malcolm Turnbull is trying to find a private buyer for AGL’s coal-fired Liddell power station in a bid to keep it open for an extra five years.

Yesterday during question time, the PM said he and energy minister Josh Frydenberg were in discussions with AGL “about how we can ensure that the power station stays in operation for at least another five years after 2022”.

AGL is scheduled to close the 2000W Liddell power station in the Hunter Valley, north of Sydney, in 2022.

But Turnbull is said to be determined to keep Liddell open and is exploring all options, saying on Tuesday night that while AGL wanted to get out of coal, it would be prepared to sell the power plant.

But when former prime minister Tony Abbott tweeted it was “good that AGL is no longer getting out of coal” the company’s CEO, Andy Vesey, was quick to dismiss his claim saying “we committed to the closure of the Liddell power station in 2022, the end of its operating life”.

Vesey then went further, pointing to an opinion piece he penned in July at the peak of the political crisis over power prices and reliability, saying “keeping old coal plants open won't deliver the reliable, affordable energy”.

His tweets forced Turnbull to clarify his earlier comments saying that the government is trying to broker a deal to extend the life of Lidell buy finding a buyer.

The prime minister said he’d spoken to AGL’s CEO “several times” about the issue and rang him again following the tweets.

“One option clearly, that I responsibly as prime minister have to explore, is keeping Liddell going”.

Turnbull said it was a matter of the right price for a “responsible party”.

“He says AGL wants to get out of coal, but he has said that he is prepared to sell to a responsible party and that’s what we’re talking about,” he said.

Asked if the government was prepared to buy the site, Turnbull said “I think it’s better that the private sector owns generators like that.”

Joel Fitzgibbon, the Labor MP for the Hunter, where the Liddell plant is based said the prime minister misled the local community over his discussions.

“I suppose it depends on how much taxpayers’ money the prime minister is prepared to throw at AGL to run the plant for just another five years,” he said.

The prime minister’s comments in parliament came ahead of the release of a report by the Australian Energy Market Operator (AEMO) into the National Energy Market (NEM) which warned that there was not enough investment in replacement energy sources “to maintain the defined target level of supply reliability, as the transition from traditional generation to variable energy resources proceeds.”

AEMO’s 2017 Electricity Statement of Opportunities said more investment was needed because falling reserves meant “there is a heightened risk of significant unserved energy over the next 10 years” leading to a potential for blackouts during peak periods.

“The overall responsiveness and resilience of the system is at risk from increased vulnerability to climatic events, such as extended periods of high temperatures, and the risk of loss of, or reduction in output of, major generation units,” the report says.

With the closure of Hazelwood in Victoria, a decade of federal government indecision over investment in the renewables, and Liddell and other coal-fired stations scheduled for closure, the AEMO says targeted actions including 1000 megawatts (MW) of strategic reserves across Victoria and South Australia are required to meet demand this summer. Another 1000MW will be needed in 2022 after Liddell has closed. The organisation is looking at paying some companies to keep capacity on standby during peak periods.

Authority CEO Audrey Zibelman said the transformation of the energy market was a global issue and market incentives were needed to hasten the transition.

“In the European, Asian and United States markets, it is increasingly recognised that changes in market design to retain and incentivise appropriate levels of investment in system security and reliability are required,” she said.

Australia’s problem is a loss of backup as coal-fired stations close.

“The power system does not have the reserves it once had, and therefore to balance peak summer demand in real time, targeted actions to provide additional firming capability are necessary to reduce heightened risks to supply,” Zibelman said.

The report says “retirement of other coal generation in New South Wales after 2022, if not appropriately replaced by firming capability, could significantly increase the risk of load shedding”.

AEMO says it is “indifferent” to what fuels or technology resources are used, but says short-term measures will be needed “until a long-term solution is agreed and becomes fully effective”.

The report says its assessment did not take into account the prime minister’s Snowy Hydro 2.0 plan, South Australia’s plan to buy 150MW of solar thermal generation and a 30MW battery in the state, Queensland’s 100MW battery and 300MW of renewable generation.

It did also not include “non-market operated developments” such as South Australian Energy Plan’s 276MW diesel generation.

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