Gas Prices Force Switch To Coal For Power Stations Down Under

  • Date: 06/02/14
  • Annabel Hepworth, The Australian

Queensland’s largest power generator will today declare that Australia is one of the world’s most expensive countries for energy and warn that the electricity market is being distorted by the carbon tax, mandatory renewables target and solar-rooftop subsidies.

After Stanwell took the extraordinary step yesterday of announcing it would mothball its biggest gas-fired power station and resurrect a coal facility built in the 1980s – sparking predictions that gas-fired power plants would be withdrawn in other states – it will today call for a scaling back of the renewable energy target.

Before the introduction of the carbon tax, the RET scheme and solar feed-in tariffs, the abundance of coal had made Australia a source of low-cost electricity, the company will say.

“These policies appear to have been implemented for ideological reasons with little analysis of the impact on electricity prices and economic growth,” Stanwell chief executive officer Richard Van Breda will say.

Stanwell will issue its warnings as part of its submission to the federal government’s energy white paper, being developed by Industry Minister Ian Macfarlane.

The submission will caution that a raft of energy policies is eroding Australia’s competitiveness in manufacturing, which is a sensitive issue for the government amid internal tensions over taxpayer handouts to businesses, including SPC Ardmona.

Yesterday, Stanwell revealed it would withdraw its Swanbank E power station, near Ipswich west of Brisbane, from service for up to three years from October so it could sell the gas rather than use it in electricity generation.

Mr Van Breda said with “subdued” conditions on the wholesale market and increasing gas prices set to continue, Stanwell could make more money selling the gas.

A unit at the Tarong coal power station – in cold storage since late 2012 – will be returned to service later this year.

In some parts of the world, cheap coal has pushed out gas, which is considered “cleaner”.

Germany is shifting back to more coal-fired electricity generation, reopening some of its dirtiest brown-coalmines that have been closed since reunification, despite having spearheaded Europe’s push into renewable energy. China has plans to add another 860 million tonnes of coal production by 2015.

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