Owner Engie has told the French Senate that it was planning to quit coal-fired power altogether, and is seriously considering shuttering the 1.5 gigawatt Hazelwood power station at Morwell, which generates about 6% of Australia’s electricity and almost 25% of Victoria’s power needs.
Engie has left the door open to selling the aging asset, although potential buyers for a 40-year old lignite-burning facility that was described the least carbon efficient power station in the OECD in a 2005 report might be thin on the ground, considering the likelihood of tough carbon emissions regulations being enacted, and the potential for a global carbon price.
The plant had originally been scheduled for decommissioning in 2005.
Engie needed a $660 million bail-out in 2012 when the banks wouldn’t touch it, and Engie has suffered the shame of a fire at its brown coal mine at Morwell for which it is still paying the clean-up bill.
Engie’s Australian unit was charged in court in February with failing to provide a safe workplace and ensure public safety over the fire.
Engie’s CEO Isabelle Kocher told a French senate committee has week that the was selling two plants in Indonesia and India and that it aims to drop coal to a mere 10% of its energy mix, and it is aiming to drop that to zero over the coming years.
“For the Hazelwood plant, we are studying all possible scenarios, including closure, or a sale if the state of Victoria tells us that it cannot meet power-generating needs without this plant,” Kocher said.
In recent months Engie had already closed the equivalent of 1.6 gigawatts worth of coal-fired plants in Europe.
Engie owns 72% of the plant alongside Mitsui & Co holding 28%.
The Australian Energy Market Operator estimates Victoria has 2000 megawatts of over-capacity, so green groups want coal-fired plants shut down, and new renewable facilities built as they are needed
Burning brown coal at Hazelwood and Loy Yang in the Latrobe Valley produce around half of Victoria’s greenhouse gas emissions.
Engie is also considering transforming some of its remaining coal facilities to biomass.
Kocher, appointed earlier this month, has said the 21st Century will make the end of fossil fuels.
“The 21st century will mark the end of fossil fuels, which will gradually be replaced by energy from decarbonized renewable resources, such as solar power,” she told French magazine La Monde.
“This will bring about a profound change in the way we behave. Alongside large-scale plants that generate energy for entire regions, we will see the emergence of a multiplicity of decentralized local generating facilities.”
Engie has a $23.2 billion disinvestment program focusing essentially on its withdrawal from oil and coal over the next three years, with the proceeds to be put into cleaner generation.
The World Coal Association estimates that coal fuels about 41% of global electricity production.
