Power giants to push back on proposed coal closure rules

Source: The Sydney Morning Herald

9th October 2019

Australia’s biggest energy companies will push back against a proposal to force the owners of coal-fired power stations to place hundreds of millions of dollars into bonds to ensure compliance with closure dates they have nominated for their ageing generators.

The novel proposal by the Grattan Institute, an independent policy think tank highly regarded in the energy sector, has been raised with state and federal governments as a way to strengthen the rules around coal closures, encourage investment in timely replacements and protect consumers from the risk of price spikes and blackouts.

“If the generator closes within the nominated window it would have these funds returned, but not if it failed to comply,” the Grattan Institute’s Tony Wood, Guy Dundas and Lucy Percival wrote in a new report released on Monday night.

“This financial incentive would be much stronger than compliance incentives under the existing three-year notice rule.”

Under national market rules, the owners of coal-fired power plants must provide at least three years’ notice of plans to shut down their generators. The requirement was introduced after the French energy giant Engie, which owned the Hazelwood power station in Victoria’s Latrobe Valley, gave just five months’ notice before closing down in 2017.

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