How to keep the lights on in NSW

by Guy Dundas and Tony Wood

Published by The Sydney Morning Herald, Monday 9 September

The looming closure of the old Liddell coal power station in the Hunter Valley has become a political football. With NSW Treasurer Dominic Perrottet declaring energy security to be one of the biggest challenges facing the economy, and federal Energy Minister Angus Taylor setting up a taskforce to examine ways to keep Liddell operating, NSW energy consumers are probably wondering whether they should be concerned.

They shouldn’t be. NSW is well placed to handle Liddell’s closure, and the broader challenge of moving to a cleaner power system. But governments, particularly the federal government, are making this harder than it needs to be.

The Australian Energy Market Operator has examined how Liddell’s closure will affect the state’s power supply. A casual look at this analysis might focus on a noticeable increase in the risk of power outages in 2023-24, the first post-Liddell summer.

But this is far from the full story. In March 2018 AEMO estimated that, after the closure of Liddell, 850 megawatts of replacement generating capacity would be needed to maintain reliability. AEMO has revised that to only 375MW. That’s because a significant influx of renewable energy generation, particularly solar, has reduced the risk of power shortfalls on hot summer afternoons.

To be clear, there still is work to do. Investment in renewables is likely to continue over the four years until 2023-24, but some additional dispatchable capacity would help. So would expanded transmission links. Demand for energy in NSW rarely peaks at the same time as in other states, and so transmission links share power reserves and improve reliability for everyone.