Victoria’s generators, Loy Yang A, Loy Yang B, Hazelwood and Yallourn, have a cumulative capacity of 6,260 megawatts and account for approximately half of Victoria’s electricity capacity.
The EEFA remediation numbers are sharply higher than the equivalent cumulative remediation cost estimate of $500 million put forth by AEMO (Australian Energy Market Operator), a gap that suggests Australian regulators are ignoring the problem, it said.
The 1,600-megawatt Hazelwood plant, which is almost 50 years old, is the most emissions-intensive generator in the entire Australian National Electricity Market, and among the most emissions-intensive in the world.
The Anglesea remediation costs suggest it would run $610-$690 million to clean up Hazelwood once it is shuttered, significantly higher than the $69 million provided for “site restoration” in the 2014 accounts of International Power (Australia), which owns 72% of Hazelwood.
Rehabilitation bonds for all of the brown coal mines that supply the Victorian generators were set in the 1990s at “interim” amounts of $15 million and have never been modernized despite significant expansion of the mines and a commensurate increase in total rehabilitation liability over the past 20 years.
“Accurate estimates of site remediation costs are subject of course to the size of a mine, specific site-remediation requirements, and definitions around what ‘remediation’ actually means,” the EEFA states.
“Notwithstanding all this, the cumulative remediation costs for the brown coal generators in Victoria could run into the billions rather than the millions of dollars. The combined sum of rehabilitation bonds and company provisions are clearly, in a word, insufficient to fund rehabilitation requirements, especially if market conditions force early retirement—as they may well do.
“In the absence of better government policy measures—ones aimed specifically and assertively at encouraging retirement of these outdated and very emissions-intensives generators—these plants will continue to operate but only to avoid paying for rehabilitation liabilities.”
