A new 1,000MW high-efficiency, low emissions coal-fired power plant would cost just $2.2 billion in government funding, and would produce cheaper power than alternatives, a report commissioned by the mining industry has said.
The report, commissioned by the Minerals Council of Australia and industry research fund Coal21, pushes Prime Minister Malcolm Turnbull – who is under pressure from households and businesses after energy companies announced price hikes over the weekend – to focus on the HELE solution instead of spending more on renewable energy.
Research and engineering firm GHD, which wrote the report, estimates a current construction cost of $2.2 million per megawatt – thus $2.2 billion for a 1,000MW plant – for a modern HELE or ultra-super critical black coal plant, “based on savings accrued from utilising a brownfield site and sourcing specialised equipment from Asia”.
The Minerals Council compares the $2.2 billion price tag to the $3 billion the Commonwealth hands out each year in subsidies to the renewable energy sector.
Moreover, the research indicates an ultra-super critical black coal burning plant would cost $40-$78 per MWh wholesale, compared with gas at $69-$115 or open cycle gas at $179-$430.
“This demonstrates that HELE coal plants – which would have operating lives of several decades – are viable and affordable options for replacing Australia’s existing ageing coal fired power stations,” Minerals Council executive director Greg Evans said.
“USC coal generation can deliver on the priorities of affordability, reliability and low emissions,” he added. “Electricity prices paid by manufacturers have doubled in the past decade [and] USC coal is able to lower the cost of generation across the National Electricity Market given current wholesale electricity market.”
Conservative pundit Alan Jones hailed the report as a call-to-action for the Turnbull Government.
“The Federal Government has botched energy policy,” Jones wrote on his website. “Construction of a HELE clean coal power plant is a no-brainer. This is a potential game-changer. Get shovels in the ground today.”
NSW Minerals Council chief executive Stephen Galilee piled on, writing in The Newcastle Herald: “While our politicians continued to debate the future direction of energy policy, Hunter MPs should think carefully about the implications of policies that block new technology HELE coal-fired power in NSW.”
Critics of the proposed HELE solution have focused on inaction from the private sector, saying projects are only going to be viable with government funding, and thus are commercially questionable from the get-go.
Labor climate spokesperson Mark Butler was particularly vocal last month, saying financial institutions weren’t willing to take on the risk of building a new HELE plant in Australia.
“The idea of new coal-fired power stations is ridiculous,” he said in late June. “They’re uninvestable.
“The only investor that’s expressed any interest in this since Malcolm Turnbull first talked about it was Clive Palmer, whose last brilliant idea was Titanic II. I think that gives you a sense of what the private sector thinks about this.
“It remains to be seen whether this is a pretty weird thought-bubble the prime minister has floated to placate the hard right of his party room through this week without having something more permanent done to the CET, or whether they are genuinely serious.”