Coalition MPs attack AGL decision to shut Liddell coal power station

Coalition MPs have attacked AGL’s decision to go ahead with the planned closure of the Liddell coal power station, arguing the alternative plan reduces base-load dispatchable power.

The energy minister, Josh Frydenberg, denied it was politically embarrassing and reserved criticism until the Australian Energy Market Operator reported back, but MPs including the chairman of the government’s backbench committee on the environment and energy, the Liberal MP Craig Kelly, wasted no time in attacking the plan.

On Saturday AGL confirmed it would close Liddell in 2022 and replace it with a mix of renewable sources, gas power for peak periods and battery storage.

The decision rules out taking up the Turnbull government’s suggestion to keep the station open for another five years at a total cost of almost $1bn, which Labor’s energy and climate change spokesman, Mark Butler, has labelled a “stunning rejection” of the Coalition’s policy.

Under AGL’s preferred plan extra capacity will come from: a gas peaker power plant at Newcastle or other New South Wales sites (250MW); an upgrade of the Bayswater coal plant (100MW); a Liddell battery (250MW); demand response (up to 150MW); a NSW gas peaker (500MW); and renewables (1,600MW).

Kelly told Guardian Australia that AGL’s alternative was “disappointing” because the total gas and battery component was less than Liddell’s output of 2,000MW, meaning it would amount to a “significant reduction of base-load power”.

AGL estimates its new plan will provide power at $83/MWh, as opposed to $106/MWh to extend the life of Liddell.

But Kelly claimed the reduction in supply of dispatchable power would push up the wholesale price of electricity and leave the state “more at risk of blackouts”.

Kelly said the decision underscored the need for the national energy guarantee, which mandates a certain amount of dispatchable power, “to ensure some way or other the shortfall is made up”.

The chairman of the House of Representatives environment and energy committee, the Nationals MP Andrew Broad, said that wind, solar and gas mixes “can be done and can work”.

But he said it was “hard to believe” AGL could provide equivalent reliability, availability and affordability from the combination of replacement power sources at a scale needed to replace Liddell.

“I suspect it will be a similar story to when Hazelwood was shut,” he said. “There were lots of assurances given but the peak gap is going to be filed by expensive and dirty diesel generators this summer in Victoria and South Australia.”

On Sunday Butler said that AGL’s decision confirmed that “the future of energy in Australia lies in renewables ... not in pouring hundreds of millions of dollars into propping up old, unreliable coal-fired power stations”.

“Malcolm Turnbull ends 2017 with his vision for the future of Australia’s energy laying in tatters,” he told reporters in Adelaide.

Butler said if AGL had given in to Turnbull government pressure to keep Liddell open it would have delivered power at more than 20% more expensive prices then their renewables, gas and pumped hydro plan will deliver.

At a doorstop in Melbourne, Frydenberg said it was the Turnbull government that “first asked the question” of what impact closing Liddell in 2022 would have on energy stability.

Frydenberg said the 1,000MW shortfall in dispatchable power identified by AEMO could be covered by keeping Liddell open, selling it, or a “portfolio of new assets and new generation” as AGL has now proposed.

Frydenberg said the government has asked AEMO to assess AGL’s plan and report by mid February, reserving judgment and criticising Labor for weighing in before the experts.

“The Turnbull government is technology agnostic when it comes to type of generation that our country needs,” he said. “Our priority is the stability and affordability of power to Australian households and businesses.”

Asked why the Coalitoin had pressured AGL to keep Liddell open, Frydenberg denied the decision to close it was politically embarrassing and said the government had “wanted AGL to put a plan forward to avoid a shortfall in dispatchable power”, which it had now done.

Butler defended the company, saying its intention was always to build renewable energy, a gas peaking plant, pumped hydro and battery storage to replace Liddell.