AGL Energy has continued to rubbish suggestions from members of the Coalition, as well as the Murdoch media and the ABC, that Australia should invest in new baseload generation, particularly in coal plants.
“We just don’t see the development of a new coal-fired power plant as economically rational, even before carbon costs,” AGL Energy CEO Andy Vesey told analysts and journalists at a briefing on Thursday, to mark the release of its annual profit results.
And nor would the company consider extending the life of existing coal-fired generators, such as the Liddell plant in the NSW Hunter Valley, which is scheduled to close in 2022.
AGL made a point in its presentation that the most economic option to replace the 2000MW Liddell would not be coal, or baseload gas, but a mix of energy from wind and solar, and various load shaping and firming capacity from other sources.
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AGL is the largest electricity generator and retailer ("gentailer") in Australia. The company reiterated that it sees wind as the cheapest power source in Australia, with solar not far behind, even when you add the cost of storage ("firming"). And of course, the costs of wind and solar continue to decline. A coal generator begun now would face competition from wind and solar which will be 50 or 60% cheaper in 7 years time when it is completed. Note that these costings do not include the impact of any tax on carbon, which would only make the cost disparity worse.
Meanwhile Frank Calabria, the CEO of Origin Energy, a competitor to AGL said:
“Renewables are now the lowest cost new generation and with the rapid increase in renewable supply not just by Origin but the broader market, we expect to see this start to put downwards pressure on prices for customers.”
Both Calabria and fellow utility chief, AGL Energy’s Andy Vesey, were keen to re-assert their belief that an increased supply of cheap renewable energy generation was the most crucial ingredient for lowering the cost of electricity.
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Out of the horses' mouths. Renewables are cheaper. The way to reduce electricity costs is to have more of them.