Latest Buzz...


Thursday, July 18, 2013

Give away coal to keep clean energy at bay

Malcolm Maiden's article in The Age yesterday "Carbon switch won't stop price rise" says "Coal-fired power stations that have their capital cost fully depreciated can produce power here for less than $10 per megawatt hour".
Coal-fired Power Station Model
Coal-fired Power Station Model

This is a very tall order considering:
  • Coal mines in NSW are struggling to cover costs of production with export prices for thermal coal falling to $80 per tonne. 
  • A reasonably modern, efficient coal-fired power station buying coal at $80 a tonne has a fuel bill of about $20 per megawatt hour. Labour and maintenance would add more.
Can Australian coal-fired power stations really afford to produce electricity at less than $10 per megawatt hour?

Are renewable, natural gas and geothermal power generators disadvantaged by coal-fired power stations being sheltered from free-market forces?

How much lower could an effective carbon price be if coal-fired power stations paid export-parity market prices for coal, just as natural gas power generators will be required to do when the Gladstone LNG facilities begin exporting next year.

NSW electricity consumers may not have to wait much longer to learn the answer to this mystery of coal being supplied at taxpayer-subsidised prices to State-owned coal-fired power plants.

"NSW power sale to hit energy prices"

Negotiations with Whitehaven coal for coal supply are in the price range of $55 to $66 per tonne, which is an increase of around 33% over the majority of current supply contracts.

Recently Centennial Coal who supplies about 50% of the NSW generators has accepted a $2.4 billion takeover by Thailand’s Banqu. The bid allows Banqu to acquire the 80 per cent of the Hunter Valley thermal coal producer it doesn’t already own. Centennial Coal’s long term contracts with the generators are due to expire shortly and Banqu has the option to increase prices for coal supply to the generators or export the thermal coal. Either option will increase the cost of generation in NSW. (Read more at Elemental Power Industries ...)