Treasurer Scott Morrison has blasted a call by Coalition MPs for the government to build a coal-fired power station, saying it would not provide cheap electricity as claimed, but power that could be twice as expensive.
With a ginger group of Liberal and Nationals MPs called the Monash Forum demanding the government invest up to $4 billion to build a High Efficiency, Low Emissions (HELE) coal-fired plant in Victoria, Mr Morrison said such a project would take many years to build and the electricity it produced would be far more expensive than that being generated by existing coal-fired power stations.
“There’s a difference between old coal and new coal. Old coal bids into the energy grid at about $30 a megawatt hour, it could be up to $40,’ he told The Australian Financial Review Banking & Wealth Summit.
“A new HELE plant five, six, seven years down the track is estimated to be bidding at around $70 or $80 so it is false to think that a new coal-fired power station will generate electricity at the same price as old coal fired power station for the obvious reason that the asset has already been written off.
“You just don’t open one up down the road and all of a sudden it’s producing power at the same price as Bayswater or any of the others. That’s just an economic fact.”
Mr Morrison said this was why generators such as Alinta Energy and Delta Electricity were interested in buying the Liddell power station from AGL Energy and keeping it running for up to seven more years until a generation shortfall that would be caused by its planned closure in 2022 is made up for by the expansion of the Snowy Hydro scheme.
“I’m not surprised Alinta and others are looking to buy an existing one, not build a new one,” he said.
“What they do in looking at a new one is they need to pay back over 15, 20 years, and so they’re going to need to have a guaranteed lock-in price at that much higher level for a much longer period of time.
“So the risk of that is consumers are going to have to pay more or taxpayers are going to have to pay more in higher subsidies.”
And that was not going to happen.
“The days of subsidising energy are over whether it’s for coal, wind solar, any of them,” he said.
“That’s how you get the best functioning energy market with the lowest possible price.”
An expression of interest by Alinta has increased pressure on AGL to sell Liddell with Prime Minister Malcolm Turnbull calling on the AGL to consider the interests of its customers, its shareholders and the public.
Mr Morrison said: “I would be hoping AGL will be giving this proposal every possible consideration.”
“I would be expecting them to act not only in their own interests but in the interests of the broader Australia economy and not be misusing any market position they have to prevent what is potentially a very good arrangement proceeding.”
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