HAZELWOOD, Australia (Reuters) - The doors to Australia’s dirtiest power station will close permanently on Friday after 50 years, amping up pressure on a government desperate to avoid the kind of embarrassing blackouts that hit chunks of the country during a recent savage heatwave.
France’s Engie SA is pulling the plug on the Hazelwood coal-fired power plant near Melbourne, cutting around a fifth of the state of Victoria’s energy supply, blaming the “huge” costs of running the aged facility amid rising competition from subsidized wind and solar energy.
With other shutdowns of fossil fuel stations potentially following down the line, the move highlights the challenges facing Canberra as it fights to balance long-term green ambitions with the need to provide affordable power.
“If the lights go out, it would be nasty,” said Tony Wood, energy program director at independent think tank the Grattan Institute.
“There’s just such a level of political and community concern that (politicians) should be nervous.”
Growth in electricity demand and a drop in supply since 2014 have strained the Australian grid. South Australia was roiled by a state-wide blackout last September, which crippled industry for up to two weeks, while the eastern states suffered six power cuts over the past summer.
“The government continues to carefully monitor this situation,” Energy Minister Josh Frydenberg told Reuters in an email.
The nation’s energy market operator has said there is enough unused capacity at existing power stations and mothballed capacity that could reopen to replace the 1,600 megawatts that Hazelwood is shutting. It is in talks to get mothballed gas-fired plants to restart.
Hazelwood has long been symbolic of Australia’s love-hate relationship with coal, attracting a major protest in near freezing conditions in 2009 that erupted into violent clashes.
It has been labelled the country’s dirtiest power station as it emits more greenhouse gas per unit of electricity than any other plant.
On Wednesday, as the facility shut the last of its eight generators, workers leaving for the last time hung their hard hats on a fence, with a handful taking photos of the final blasts of steam coming out of the ‘stack’.
“It feels terrible. Everyone thought it would be a partial closure. No one ever thought it would be a full closure,” said Scott Meadows, who has worked at the site for 36 years.
Prime Minister Malcolm Turnbull fought off last-minute lobbying from industry and right wing politicians to step in to rescue Hazelwood to secure power and save 750 jobs in an already economically depressed region.
“At the very least they should have closed it in stages over two years. They’re just walking away,” said Tony Maher, president of the mining and energy division of the Construction, Forestry, Mining and Energy Union (CFMEU).
Engie was not asked by the federal or state governments to postpone Hazelwood’s closure, even after the string of blackouts across the eastern states over the past summer, said Engie’s head of corporate affairs, Jim Kouts.
The spotlight is now shifting to EnergyAustralia, owned by Hong Kong’s CLP Holdings, which runs another aged coal-fired plant in Victoria, at Yallourn.
EnergyAustralia said it has enough coal reserves to last until 2032 and has plans to run through until that time, but has not ruled out closing before then.
“Of course, we acknowledge policy and market settings may change, but whatever we do we will not sacrifice the affordability and reliability of our customers’ energy supply,” said an EnergyAustralia spokeswoman.
The CFMEU’s Maher and industry experts predict that Yallourn will not shut any time soon as its profits are likely to rise following the closure of Hazelwood.
In Victoria, daily wholesale power prices surged to A$47.90 ($36.70) per megawatt hour (MWh) in the first quarter from an average since 2000 of A$29.60.
“(Yallourn‘s) prospects of staying open longer strengthened the day Hazelwood’s closure was announced,” Maher said.
Reporting by Sonali Paul; Editing by Joseph Radford