Australia has been actively closing its major coal power plants despite their clear advantages in terms of low operating costs and the ability to provide continuous baseload power, regardless of weather conditions. This reckless policy experiment has led to soaring energy prices and jeopardised reliability.
Despite clear warnings, governments and regulators have doubled down on forcing coal out of the market, despite its ability to provide dependable, dispatchable power in favour of intermittent renewables that cannot.
While several coal plants closed before the world’s elites claimed carbon dioxide as a pollutant, the gradual phase-out of coal as an energy source in Australia began in New South Wales just over a decade ago. The Munmorah power station ceased operations after 45 years. Despite millions of public dollars being invested in a “clean coal” technology trial, Delta Energy took the funds and announced shortly after the plant’s closure in 2012.
The relatively new Redbank and the older Wallerawang C stations, also located in New South Wales, shut down in 2014. They were followed by Victoria’s Hazelwood power station, considered the country’s “dirtiest” coal-fired plant, in 2017. Liddell, one of the largest coal power plants in the country, closed in 2023, while the country’s largest plant, Eraring, which was scheduled to shut down this year, has been granted a short reprieve.
Hazelwood – a symbol of Victoria’s energy folly
The closure of Hazelwood Power Station was a significant event in Victoria, particularly because Australia had not yet established and solidified the projected renewable energy replacements. The decision was not driven by technical limitations but by punitive policy settings and ideological pressure.
The Hazelwood plant was initially authorised to operate until 2030 based on the expectation that its 1,600 MW capacity would continue to be part of Victoria’s baseload power supply. Built in the 1960s, the brown coal-fired plant supplied up to 25 per cent of Victoria’s electricity at some of the lowest rates in the country.
However, the political and regulatory environment shifted drastically in the 2000s and 2010s. A combination of increasing emissions reduction policies, higher operating costs from carbon pricing and state-based taxes, and government incentives for renewable energy made it increasingly challenging for Hazelwood’s operator, Engie, a French multinational, to justify continued investment.
The Victorian government played a significant role in forcing an early closure. In 2016, the state tripled the brown coal royalty rate, adding approximately $20 million per year in costs. Around the same time, Hazelwood faced looming compliance costs for plant upgrades and increasing pressure from environmental groups. Engie, already under pressure from its parent company’s global decarbonisation strategy, announced it would close Hazelwood in 2017—thirteen years ahead of schedule.
At that time, the government asserted that Victoria had an oversupply of electricity. However, much of this alleged surplus depended on aging coal plants that were nearing closure or on future renewable projects not yet connected to the grid. The early closure of Hazelwood caused wholesale power prices to double in Victoria and South Australia, while grid reliability became an increasing concern.
Fast forward to today, and Victoria struggles to integrate its ambitious renewable energy projects into the grid. Many of these initiatives are in regional areas where high-voltage transmission lines do not yet exist or face significant delays due to planning, environmental approvals, and local opposition. Despite years of political promises, the infrastructure necessary to replace coal-fired baseload power remains inadequate, leaving Victoria at risk of power shortages.
This sequence of events highlights the contradictions in energy policy as governments strive to phase out reliable, dispatchable power sources without ensuring that viable alternatives are in place. Hazelwood’s premature closure reflects flawed environmental policy, political short-sightedness, regulatory overreach, and the challenges of transitioning an electricity market without causing supply disruptions.
Liddell – the canary in the coal mine
Liddell Power Station, a 2,000 MW coal-fired plant in the Hunter Valley, was originally built to provide reliable baseload power for New South Wales and was expected to operate well into the 2030s with proper maintenance. However, political and regulatory pressures, along with economic factors, led to its closure in April 2023—years earlier than initially anticipated. Liddell was not only closed senselessly; it was sold for $0, and the 50-year-old plant will be demolished.
Owned by AGL, Liddell had long been in the crosshairs of climate policies advocating for a transition away from coal. Under Malcolm Turnbull and later Scott Morrison, the federal government pressured AGL to extend the plant’s operational life, but the company was already shifting its business strategy towards renewable energy. AGL pointed to the high costs of upgrading the aging plant, alongside the increasing development of renewable and storage projects, as justification for its decision to shut it down.
The shutdown of Liddell highlights a recurring pattern of energy mismanagement seen in other closures: eliminating dispatchable baseload power before adequate replacement infrastructure is established. This premature closure, influenced more by political ideology and corporate strategy than by practical energy security, has further worsened Australia’s power reliability issues—resulting in higher costs and greater uncertainty for consumers.
The idle Redbank power station in the Hunter Valley operated on coal and biomass, utilising a co-combustion process with a fluidised bed combustion system. It also used coal tailings to generate power from 2001 until 2014, when it was mothballed. The current owner, Verdant, estimates that the station could be brought back online within four to eight months if there is any interest from the government in cutting through the red tape that hinders the bureaucratic process. CEO Richard Poole has been leading efforts for the past four years to reopen the plant using biomass, which would generate renewable power and transmit it through the existing network 24/7, but he has been unsuccessful.
Eraring – the test case for Australia’s first-world energy status
Eraring Power Station, New South Wales’ largest coal-fired power plant, meets 25 per cent of the state’s energy demands. It was initially projected to operate well into the 2030s. This 2,880 MW facility, providing about 20 per cent of the state’s electricity, was constructed in the 1980s and has been a vital part of the national energy market.
The political and regulatory landscape shifted dramatically over the past decade. The New South Wales government and federal energy policies increasingly favoured renewable energy while imposing additional costs on coal-fired generation. In 2022, Eraring’s operator, Origin Energy, made a surprising announcement to shut the plant by August 2025—seven years ahead of schedule—citing the rapid growth of renewables and the declining profitability of coal.
Origin’s CEO pointed out the upheaval in the National Energy Market, where an influx of renewable energy is affecting the viability of coal-fired plants.
The Australian Energy Market Operator (AEMO) immediately stated that the planned additional transmission capacity – including the battery storage – would provide the state with sufficient electricity generation to meet the Energy Security Target when Eraring closes.
One of the batteries mentioned will be Australia’s largest, but it will only have a maximum dispatch duration of four hours and is expected to provide a reliable power supply when renewable sources are inevitably unavailable.
However, despite political claims that renewable energy and battery storage could replace Eraring, the infrastructure to support such a transition remains insufficient. The state’s planned Renewable Energy Zones (REZs) and Snowy Hydro 2.0 have encountered repeated delays. New transmission lines required to connect wind and solar factories to the grid are years behind schedule. Another reality is that batteries do not generate power; they merely store a limited amount.
Consequently, the state government and AEMO realised that without Eraring, the state would encounter energy reliability issues starting in 2025. The government was forced to negotiate a deal with Origin Energy to keep Eraring operational for at least another two years, enabling:
an orderly exit from coal-fired power to ensure lights stay on for homes.
This policy failure costs taxpayers $225 million each year Eraring remains open. However, the government refers to it as a “calibrated risk-sharing arrangement.” If Eraring generates a profit, it must share it with the government. Predictably, green activists claim that the delay will jeopardise efforts to combat climate change, and the people of Lake Macquarie will have to endure the pollution from the facility for another two years.
The reality for activists is that Eraring accounts for less than 0.004 percent of total global emissions. This means that any potential environmental benefit from its closure is merely symbolic and inflicts significant pain on the local community. It also challenges the state’s ability to provide reliable energy around the clock for businesses and residents. Eraring’s significance underscores that net-zero policies require substantial reconsideration.
However, as demonstrated by Hazelwood and Liddell, the rationale behind these closures is straightforward: to phase out coal and replace it with renewable energy. Yet, planned renewable projects are never ready on time. New transmission projects, firming capacity, and battery storage solutions consistently fall behind schedule. Despite government assurances that alternative energy sources would bridge the gap, wholesale electricity prices soared in NSW after Liddell’s closure, raising concerns about grid stability.
The removal of affordable and reliable baseload power should not take place until a comparable replacement is available. This could involve coal-fired, gas, or nuclear options. Australia’s energy network can no longer be treated as a plaything for ideologues who seek to impose their renewable energy visions without comprehending how to maintain our electricity supply.
The governments naively believed that coal was worthless until the plants shut down and electricity prices soared.
A fragile system
Australia’s remaining coal power stations are closing at an alarming rate, with no credible plan to replace the lost capacity.
- Hazelwood (Victoria) – Closed 2017
- Liddell (NSW) – Closed 2023
- Eraring (NSW) – Planned closure 2025, now extended to 2027
- Yallourn (Victoria) – Planned closure 2028
- Vales Point (NSW) – Planned closure 2029
- Loy Yang A (Victoria) – Planned closure 2035
- Callide B, Kogan Creek & Tarong (QLD) – Facing pressure for early shutdowns. Callide was earmarked for closure in 2028 but the new state government has indicated a policy shift.
However, in a sign of common sense and facing reality, just last month, the new Queensland coalition government announced plans to keep their coal power stations open longer than previously planned. Callide B will now operate until at least 2031.
As each station shuts down, the remaining coal fleet must work harder, often operating at higher costs. Blackouts and power rationing are emerging as real threats, yet policymakers remain fixated on phasing out coal at any cost.
AEMO has repeatedly warned of impending energy shortfalls as coal closures outpace the availability of replacement capacity. While renewables have expanded rapidly, their output fluctuates significantly, necessitating backup from gas, batteries, or hydro. However, these alternatives present their own challenges. Gas is expensive and politically contentious; batteries are costly and have limited duration, and hydro is geographically constrained.
New South Wales faces an energy crunch with the imminent shutdown of Eraring. The state government has scrambled to delay the closure, belatedly realising that the promised renewable transition is far from ready. Similarly, Victoria, which lost Hazelwood and is set to lose Yallourn in 2028, is in a precarious situation. Yet, policymakers insist, somewhat delusionally, that an economy powered solely by wind and solar is within reach.
The push to eliminate coal has come at an astonishing financial cost. Electricity prices have soared as the grid struggles to cope with the loss of dispatchable power. Billions have been invested in renewable subsidies, yet consumers are paying more than ever. Moreover, government-issued renewable certificates do not provide power; instead, they inflate prices because they hold more value than the energy generated. In essence, we no longer have an energy market; we have an energy racket.
The government’s justification for these price hikes has been the questionable assertion that renewables are “cheaper.” However, this claim overlooks the hidden costs of backup power, expanded and duplicated transmission network expenses, and market interventions necessary to maintain the electricity supply. The outcome is an energy system that is both more costly and less reliable than before.
The road ahead – a looming crisis
If policymakers maintain their current trajectory, Australia is heading toward an energy crisis of its own making. Reliable coal power is being phased out before viable alternatives are in place, leaving consumers to bear the consequences. Until the reality of energy supply is prioritised over ideology, the country will remain mired in a costly, self-inflicted crisis.
The issue extends beyond the closure of coal plants; it includes the misguided belief that renewable energies can effortlessly substitute coal without causing significant disruptions. Solar and wind power necessitate substantial investments in transmission lines and backup storage, which have not been sufficiently provided.
Furthermore, industry experts have cautioned that pushing more renewable energy into the grid without reliable backup will only raise costs. The dependence on batteries and pumped hydro remains untested at scale, and there is no assurance that future projects will be completed on schedule or within budget.
AEMO’s own reports indicate that Australia could face shortfalls as early as this year, particularly in Victoria and New South Wales, where coal retirements are accelerating. The Albanese government continues to promote its ‘Future Made in Australia’ green energy policies; however, without coal, these policies risk plunging the country into an energy disaster.
A reckless transition
The premature closure of Australia’s coal power stations is a reckless gamble with serious consequences. Energy reliability is already at risk, prices are climbing, and no clear plan exists to replace baseload capacity. Governments have overlooked industry warnings and let ideology drive policy, forcing Australians to bear the costs.
This is particularly relevant when we consider plans in other countries. China plans to build 95 MW of coal-fired power stations this year. Compare that to Australia, which has only 22 GW of current coal-fired power capacity. India, Pakistan and Indonesia are also expanding their coal power capacity at eye-watering rates compared to Australia’s crazy policy of removing coal plants before any reliable replacement power source is in place.
Governments keep bleating about energy security, yet they do nothing to address it. Reliable energy is essential for the defence and manufacturing industries, as well as for keeping the lights on.
The policy of selling our coal to China so they can manufacture the components for wind and solar generators, which we can then install across food-producing agricultural land so that the Teals, Greens, Labor, the Liberal Party, and their inner-city supporters can feel virtuous, is just reckless. Our contribution to global warming, overhyped by left-leaning mainstream media outlets and the Bureau of Meteorology, is so minuscule that all this virtue signalling does nothing more than destroy our nation.
The question remains: how much higher will energy prices climb before policymakers and activists acknowledge their mistakes? Or, more pointedly, how far will this madness escalate before the electorate finally awakens and fights back against it?
One commentator assessing the recent widespread electricity blackouts in Europe put it bluntly:
That the electricity system in most of Europe and many U.S. states is in the hands of crazed fanatics who have no idea what they are doing.
He should have added Australia to his list.
As always, Rob, you write a lot of sense, however Australians go to the polls tomorrow – unthinking and overwhlemingly ignorant. Your whole blog is NOT news, but I suspect you are preaching to the converted, who are too few in numbers to sway the election result.
One question: You do not mention Western Australia at all. Do you know what – if any – ideology rules there?
Allan, I don’t know much about the Western Australian grid system, except that it is separate from the Eastern Grid. I understand they, too, are phasing out coal power, with Collie due to close in late 2027 and Muja-D in late 2029. As they are not connected to the Eastern Grid, it will be interesting to see how they survive.
South Australia is the most advanced renewable state (apart from Tasmania, which has a relatively reliable hydro system). However, it survives on brown coal from Victoria and gas when the wind and sun don’t do their job, which is, unsurprisingly, often. Victoria provides coal-powered electricity equivalent to about one-quarter of South Australia’s peak demand. What happens when that source of power disappears?
Its costly battery can optimistically provide one hour of power. Its primary purpose is to maintain grid stability, an issue that has only become prominent with the high penetration of renewables.
It’s hilarious when the renewable acolytes brag about South Australia using a high percentage of renewables. Still, they fail to explain that it is only for a short period, mostly well outside peak periods. For example, we saw rooftop solar exceed 109% of demand on 29 October 2023, but it was in the middle of the day, and no one could tell us how long that lasted. Nor will they tell us what percentage of renewables supplied the demand later that day when demand peaked between 5 and 7:30 pm.
This mismatch is highlighted by rooftop solar owners now being “slapped in the face” with bills rising to nearly $1,000 a year, as some energy companies hike charges and slash rebates for putting solar back into the grid.
But it gets worse for South Australians. The “big battery” owners are holding the grid to ransom when the unreliable renewables fail to deliver, leading to unbelievable peak pricing to keep the lights on.
It is not uncommon for the power generated by renewables to fall to zero across all South Australia! So much for the BS we get fed that if you waste enough trillions on renewables, eventually, we can rely upon an intrinsically unreliable energy source. It’s like reading a Monty Python script.
I reckon Western Australia will be even more vulnerable than South Australia when the coal plants are closed because it won’t be able to tap into coal from Victoria or hydro from Tasmania when its renewables don’t deliver, and batteries cannot help.
Wait until hospitals ever face an emergency (just like the chinese virus) and have to rely on weather for energy.
Another great blog, Robert. I’m stocking up on firewood, candles and long-life milk…and will see if can find that old Coolgardie safe in grandfather’s shed.
John, good idea. It’s a good idea to do that, plus a generator.
Well written and on point as usual. Are you adding an addendum mentioning what happened in the Iberian Peninsula last week? With green tape holding up gas exploration, it’s a certainty it will happen here under the current trajectory.
Thanks Tim. I mentioned last month’s Iberian blackout in the email promo and intro on my Facebook page:
“Late last month, the widespread blackouts in Europe exposed a growing vulnerability in modern power grids reliant on too much renewable energy: a critical lack of inertia. This was a foretaste of what Australia can expect.
Traditional coal, gas, and nuclear plants provide essential rotating kinetic energy––a built-in stabiliser that instantly releases energy to balance the grid after unexpected failures. Wind and solar, however, lack this ability. They simply convert weather into electricity without storing or regulating energy, making power systems more brittle and prone to collapse when faults occur.
The European blackout is a stark warning that over-reliance on weather-dependent renewables without enough inertia undermines grid stability. Australia now faces the same risks as it continues its reckless path toward intermittent renewables at the expense of heavy-duty, reliable coal power plants.
This isn’t climate denial––it’s energy realism. And it’s time we asked: how much are we willing to pay for ideology over engineering?”