For Sale – 7.5 Million Tonnes of CO2
“NSW workers may find themselves in a situation similar to that of workers in Victoria, where the privatisation of the state’s electricity grid is happening at an alarming rate.”
The above quote appeared in the Australian on the 3rd of May, 1995. The NSW Government is indeed moving at an alarming rate. In only fourteen short years the Government already has a draft plan and a tentative sale date.
In the interim of course, we have seen uncertainty throughout the industry, a reluctance of the private sector to invest in new generation assets, and now expected sale prices slashed due to the credit crunch.
The Government has outlined its sale plans in the document ‘NSW Energy Reform Strategy – Defining an Industry Framework (6 March 2009)’. What I find most interesting in this plan are the generation development sites, and one site in particular. Munmorah Power Station Units 3 & 4 produce a combined 600MW of coal-fired generation, and were commissioned in 1968 and 1969 respectively. Currently operated by Delta, and located on the NSW Central Coast, they are due for refurbishment soon – but not yet. The Energy Reform Strategy says:
“One of the sites, Munmorah, represents more than a greenfield or brownfield development opportunity. Munmorah is expected to operate until winter 2014, at which time it will require a major overhaul/re-furbishment. NEMMCO has been advised that Munmorah will be unavailable from winter 2014.”
So despite the fact that the state Government’s plan to sell generation was defeated, it seems that they have managed to put a for-sale sign on some generation. The loophole is no doubt that Munmorah is slated for closure, but there is still at least five years of operation left in it. The refurbishment would upgrade Munmorah to a 700MW plant and extend its life for another 20 – 40 years. There is no mention of the recent Delta/CSIRO carbon capture pilot project, which is based at Munmorah.
In November 2007, seven Greenpeace activists were arrested at a protest at Munmorah. The protesters were calling for an immediate closure of the power station as it is the oldest and dirtiest in the state. Whoever buys Munmorah will no doubt be hoping for plenty of free permits under the upcoming CPRS to cover the next few years of emissions.
GD on April 3rd, 2009
Interesting article. Except there is a major error. Black coal generators like Munmorah won’t get any free permits.
The coal-fired generator assistance program only gives credits to the extent that the plant’s emission intensity exceeds 0.86t/MWh (measured at the terminals, before auxiliaries and parasitic load). When you add back in auxiliaries and parasitic load, the compensation threshold is close to 1.0t/MWh.
Pretty much only brown coal generators are over that threshold. So, Munmorah or its new owners will see none, or very few, free credits.
Also, the amount of free credits for power stations is limited to 26M per annum, and only for the first 5 years. Emissions from NEM generators per annum is about 160M tonnes, to which you need to add in WA and NT. So, over the period until 2020 the free permits available to power stations covers less than 8% of emissions, and then only for brown coal generators. 92% of emissions will need to be paid for out of the power station operators’ pockets.