Wallerawang Power Station

Wallerawang Power Station is a 1000 megawatt (MW) coal-fired power station owned by EnergyAustralia, a subsidiary of CLP. The plant, which comprises two 500MW units, is located 15 kilometres west of Lithgow in the Central West region of New South Wales (NSW). The station began operating in 1957 and was owned by the publicly-owned utility Delta Electricity until the NSW government initiated the privatisation of generation assets in 2011.

In January 2014 EnergyAustralia announced that one of the 500MW units would be removed from service immediately and the second would operate until the end of March and then be available, if required, on three months notice.

Background
In December 2010, as part of the NSW government's privatisation process TRUenergy, as the CLP subsidiary was known at the time, bought the government-owned EnergyAustralia's retail business, the 'gentrader' rights for Delta Electricity's Mount Piper Power Station and the Wallerawang Power Station and three power station development sites. The total cost was $2.035 billion. In the briefing notes on the deal, CLP emphasised that the Mt Piper Power Station was "the newest and most efficient black coal generator in NSW commissioned in 1990s" and made only a nominal mention that the Wallerwang power station was a part of the deal.

In July 2013 EnergyAustralia announced that it had bought both the Wallerawang Power Station and the nearby Mt Piper Power station for net cost of A$160 million. The company stated that the deal was scheduled to be completed by September 2, 2013. The company's media release stated that the benefit of the deal was that it would be "released from high cost fixed contract commitments we currently incur under the GTAs [GenTrader Agreements] and will gain unrestricted access to the full 2400MW capacity of the plants." However, the company signalled that while the Mt Piper Power Station was "one of the newest and most efficient black-coal fired power stations in NSW", the Wallerawang Power Station "has comparatively lower levels of efficiency and higher fixed costs".

Coal supply
In 2009 the former owner, Delta Electricity, stated that "over 75% of the power station's coal requirement is provided by the nearby Angus Place Colliery. The coal is transported by a private coal haul road. Additional stocks are supplied by local privately owned mines. The coal is taken by conveyor to the power station pulverising mills, where it is crushed to a fine powder before being burnt in the furnace. Up to 2.2 million tonnes of coal are consumed each year," Delta Electricity's website states.

Closure
In mid-January 2014 EnergyAustralia announced that it would close Unit 7 immediately and that Unit 8 would operate until the end of March and then be mothballed but available for service on three months notice. The Western Advocate newspaper reported that EnergyAustralia attributed the closure to falling power demand and high operating costs due to a lack of "cheap local coal supplies". The newspaper reported that the company stated that the long-term operation of Wallerawang would be considered in late 2014 as part of the company's planning for 2015. The Lithgow Mercury reported that Energy Australia released a statement attributing the closure to "commercial coal supply shortages and a declining trend in energy demand across NSW."

However, Centennial Coal, which supplies coal to the power station, objected to the coal price as being a central reason for the plant' closure. "Outdated technology, coupled with decreasing market demand for coal-fired energy, are fundamental to Wallerawang’s current position,” Centennial Coal’s chief operating officer Steve Bracke said. “When a mine is owned by a power station, the generator only needs to cover its cost of investment in the mine and its cost of production. Its return on that investment is captured as a reduced cost of supply – i.e. that supply can be bought at cost. This is not the case for Centennial, which needs to ensure a return on its investment to secure both the long-term future of its workforce and local operations," he said.

Related SourceWatch Articles

 * Australia and coal
 * Closed coal plants in Australia

External Articles

 * Giles Parkinson, "The decline of base-load: Is solar about to claim biggest victim?", RenewEconomy, October 4, 2013.
 * Natalie Whiting, "AWU claims Wallerawang Power Station will be mothballed next March", ABC News, November 7, 2013.
 * "NSW Wallerawang coal power plant to be mothballed, says union", RenewEconomy, November 7, 2013.