AGL mothballs gas unit with work set to start on big battery

AGL has informed the Australian Energy Market Operator (AEMO) it intends to mothball the gas-fired Torrens B1 unit in October, a month after it mothballs the last of its Torrens ‘A’ units.

The energy giant said the continued decline in South Australian forward wholesale electricity prices and the volume of new wind and solar capacity entering the market has created challenging conditions that do not support the financial viability of operating all four units at the 800 MW B station.

The announcement signals the next step in AGL’s strategy to transition from traditional baseload energy generation to more flexible sources as it navigates the shift to renewable energy and follows last week’s announcement that the company will demerge into two separate listed entities next year to split its retail and baseload generation functions.

While the decision to mothball the B1 unit is the beginning of the end for the gas-fired facility, AGL chief operating officer Markus Brokhof said the Torrens Island site will remain a key part of its portfolio with a 250 MW one-hour duration grid-scale battery to be installed at the location on Adelaide’s north-western outskirts.

“Torrens Island continues to be an important site for our future generation plans, including its development as a low-carbon industrial energy hub of the future,” Brokhof said.

“Construction of our 250MW grid-scale battery is planned to begin later this year, making it the first of AGL’s planned 850 MW of batteries to get underway.

“This new grid-scale battery along with the Barker Inlet power station that commenced operations in 2019 demonstrates our commitment to playing a leadership role in the state’s energy transition.”

The Torrens Island big battery, which is expected to be fully operation by early 2023, had originally been slated as a four-hour-duration system but that is now being kept as an expansion plan.

Brokhof has previously said battery technology is key to enhancing the energy system’s flexibility while leading Australia’s energy transition and ongoing integration of renewables.

The Torrens Island battery is among a slew of energy storage plans AGL has in place.

AGL is also developing a 200 MW grid-scale battery at its Loy Yang power station in Victoria’s Latrobe Valley, a 150 MW battery at its Liddell power station and a 50 MW battery in Broken Hill in New South Wales as well as supporting grid-scale battery projects including Wandoan (100 MW) in Queensland and has announced plans to develop four 50 MW batteries in conjunction with energy group Maoneng in NSW. It is already operating the 30 MW/ 8 MWh BESS at Dalrymple in South Australia.

Brokhof said the decision to mothball the B1 unit was only made after careful consideration of reliable supply against the changes in capacity requirements and pricing.

“We will continue to provide South Australians with access to reliable and affordable electricity. We have assessed all publicly available information and are confident there is sufficient capacity available to AEMO to ensure system strength,” he said.

Based on the power station’s maintenance cycle, AGL says the B1 unit is the most appropriate to be mothballed and preserved for a potential recall, indicating the unit will take six months to bring back online should market conditions change.

AGL will continue to operate the remaining three 200 MW B units, along with the adjacent 210 MW gas-fired Barker Inlet power station and will review the decision should there be material changes to the market conditions.

AGL has already mothballed three of Torrens Island ‘A’ station’s four 120 MW generating units, with the remaining unit to be mothballed in September and retirement planned for September 2022.