WA coal generator undercut by rooftop solar boom

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The changing generation profile in Western Australia, with soaring rooftop solar installations, is undermining state-owned retailer Synergy’s market dominance, reflecting on the dispatch profile of its generation fleet and cost of generation. In order to protect against higher power bills for households and ensure stable electricity supply, the WA state government has announced two operating units at Synergy’s Muja Power Station will be retired from October 2022.

Located near the Collie coal fields, Muja Power Station was commissioned in 1966 and is the oldest power station in the state. It is comprised of four 60 MW units (Stages A-B), which were mothballed in 2017 and 2018, two 200 MW generating units (Stage C) and two 227 MW units (Stage D). 

Since demand for the the two C units has declined dramatically, keeping them open is estimated to cost WA taxpayers at least an additional $350 million. With 400 MW of power removed, Muja D is expected to work better and be more cost effective.

“It no longer makes sense to keep the Muja C units operational,” Premier Marc McGowan said. “They are expensive to run, and demand for electricity from the units is declining dramatically.”

Namely, the 40 year-old Muja C units are only being used around 35% of the time. If they remain open, their high operating costs, combined with increased maintenance requirements due to the additional cycling of the plant, is set to force power prices up.

The reason behind reduced demand for traditional coal-fired baseload power generation are increasing levels of residential rooftop solar power, the government said. With more than one in four homes in the south-west grid now having a solar system, the Australian Energy Market Operator (AEMO) said in a recent report the proportion of households expected to have PV would exceed 50% within a decade, while the amount of rooftop solar capacity would rocket from about 1100 MW to 2500 MW.

“It is well-recognised a major transformation is underway in the Western Australian energy sector, as the take up of renewable energy and storage technologies increases,” said WA Energy Minister Bill Johnston. “As a Government, we need to carefully manage this change to keep energy prices down and deliver reliable electricity to Western Australians.”

Around 70-80 workers will be affected by the closures and the state government has committed to providing support, including options for redeployment and reskilling.