This article is more than 3 years old

This article is more than 3 years old

Up to 1,000 jobs are to go after staff at Hazelwood power plant in Victoria’s Latrobe valley were told in a meeting on Thursday that the coal-fired station will close on 31 March.



The workers – comprising about 800 full-time staff and 200 part-time employees and contractors – were told of the closure during a meeting at the plant this morning, and have been offered assistance packages from the state and federal governments, including retraining, career advice and counselling.



The plant’s main owner, Engie Australia, did not confirm the closure until Thursday afternoon. In a statement, its chief executive, Alex Keisser, said the power station had been operating in a difficult national energy market environment for a “considerable period”.

What will fill the hole left by coal? Read more

“Engie in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation,” he said. “Given current and forecast market conditions, that level of investment cannot be justified.”

While the Construction Forestry Mining and Energy Union said about 1,000 workers would be affected, Keisser said Hazelwood employs about 750 people – 450 direct employees and 300 contractors.

After its closure, up to 250 people will be required between 2017 and 2023 to manage the mine and power station site rehabilitation, he said.

Departing Engie employees will receive all their entitlements, including a redundancy package.

“I understand this is a very difficult time for our people who have worked so hard over the years to produce up to 25% of Victoria’s electricity needs,” Keisser said.

“We also appreciate that this decision will have a significant impact on the Morwell and broader Latrobe valley communities and we will work with regulators, unions and the local community to ensure an orderly closure, including rehabilitation of the mine and remediation of the power station site.”

Facebook Twitter Pinterest The Hazelwood power plant, which is to close, was described by Environment Victoria as ‘the oldest and most polluting power station in Australia’. Photograph: Julian Smith/AAP

Along with the closure of Hazelwood, Engie also announced it had decided to appoint a financial adviser for the possible sale of Loy Yang B coal power station, also in the Latrobe valley, and the Kwinana co-generation facility in Western Australia.

The 1,000-megawatt brown coal-fired Loy Yang B power station provides up to 17% of Victoria’s power needs. The 122-megawatt Kwinana gas-fired plant supplies steam and electrical power directly to the BP Australia Kwinana oil refinery and electricity only to the state-owned utility, Synergy.

“It is important to stress that we would only consider a sale of these valuable assets if they met our shareholders’ requirements,” Keisser said. “If a sale process were to proceed, it would be expected to be completed by late 2017.”

Wendy Farmer, president of Voices of the Valley, which advocates for new and diverse industries in the region, said the closure was not a win for any particular group. “It’s a business decision made by a foreign company, simple as that, and reaffirms the urgency for a Latrobe valley transition plan to be created and implemented,” she said.

“We absolutely do not want to see a thousand people lose their jobs without a strategy for re-employment.”

UK coal-powered electricity projected to fall by record amount Read more

The announcement ends months of speculation that Engie intended to close the plant as part of a move away from coal-fire power.

Tony Maher, national president of the CFMEU, said any government assistance must include early retirement. “The entire Latrobe valley will feel the impact of the closure of Hazelwood, which is the beating heart of this community,” he said.

“But despite that, not many people will be surprised as it has been on the cards for some time. But that is precisely why workers are so deeply and bitterly disappointed in the federal government at this time.

“You’d have to be hiding under a rock not to know the electricity sector is changing, it has been doing so for years. These changes are occurring because of long-term economic restructuring and policies designed to shift from non-renewable energy sources to renewables.”

The prime minister, Malcolm Turnbull, said the government established a ministerial task group “some time ago” to ensure support for the community in the event of a closure.

The group would now work with the Victorian government to ensure support for jobs and business opportunities, he said. The federal government will also provide $43m in support to support the workers including $20m in support for local infrastructure, $3m to help employees and a $20m regional jobs package.

“Our thoughts today are with the tough times for the men and women who work at Hazelwood and of course the many others in that community whose jobs depend on that power station,” Turnbull said.

The Victorian premier, Daniel Andrews, is chair of a Latrobe valley cabinet taskforce which he said had been preparing for the announcement. He announced a $22m package of support including a workplace transition centre in Morwell, education, counselling, and financial advice, and subsidised jobseeker training.

An additional $20m will fund the establishment of a dedicated Latrobe valley authority to manage the transition and the future economic development, he said.

But despite calls for the government to focus on renewable energy jobs and begin transitioning away from coal, Andrews told reporters that coal industry would “have a significant presence in this community for a long time”.

“Perhaps some of those who have been given the bad news today at Hazelwood [could be] deployed at other power stations,” he said. “If their production goes up, they may need more staff.”

In May, Engie’s chief executive, Isabelle Kocher, told a French Senate committee the company planned a gradual withdrawal from coal-fired power generation, and that the share of coal in its energy mix would fall to about 10% from 15% over the next couple of years.

Environment Victoria’s chief executive, Mark Wakeham, described Hazelwood as “the oldest and most polluting power station in Australia”. He welcomed the closure but criticised the state and federal governments for not putting in place plans to retire the plant and assist the affected workers earlier.

Australia's dirtiest power station may be closed or sold, French owner says Read more

“It’s been really frustrating watching these decisions being made in Paris by corporations,” Wakeham told Guardian Australia. “Our state and federal governments should have had a clear plan to support new clean energy projects and to support the communities affected.

“Hopefully the closure of Hazelwood is a wake-up call to governments that, rather than have these decisions made by corporate headquarters overseas, we need to start taking leadership.”

The closure follows the sale by Engie of its coal plants in Indonesia and India earlier this year.

Wakeham urged governments to start planning for the closure of other coal plants and to start creating new jobs in renewable energy, with Hazelwood one of four brown coal plants in the Latrobe valley.

The 1,600-megawatt Hazelwood plant opened in 1971 and provides almost a quarter of Victoria’s baseload electricity needs. A Frontier Economics report published in May predicted that closing Hazelwood would lead to electricity price rises of up to 25% in the immediate aftermath.

The report said: “Given brown coal power stations are the cheapest thermal plants to run in the NEM [national electricity market], it follows that the removal of these power stations will result in higher cost generation running more to meet demand.”

But Victoria’s energy minister, Lily D’Ambrosio, said separate modelling done for the Department of Environment, Land, Water and Planning had found that household energy bills may rise only 4%, or less than $1 a week.

“It’s a sad fact of reality that in the case of Hazelwood’s possible closure, there will be an impact on electricity prices,” D’Ambrosio said before the announcement. “While that seems small, we know there are Victorian families already doing it tough.”

Dr Roger Dargaville, an expert on energy efficiency and energy systems from the University of Melbourne, said there was an oversupply of electricity nationally. Any gap left by Hazelwood would be filled by other power stations in La Trobe or possibly in New South Wales, he said.

“There is more supply than required and given that Hazelwood is one of the oldest and most carbon-intensive, it seems logical that it should be the next one to exit the market,” he said.

“NSW plants are running at very low capacity and though they run at slightly higher costs, as they run on black coal rather than brown coal, I’d say any electricity price increases would be minimal. That being said, energy markets are fickle beasts and are sometimes unpredictable.”