AGL Retires Liddell Power Station to Build Renewable Energy Hub

This photo shows the Liddell Power Station in New South Wales, Australia, on April 28, 2023. (Courtesy of AGL Energy)

Another major coal-fired power station in Australia has been shut down after 52 years of service as its owner steps up the transition to renewable energy.

On April 28, AGL, Australia’s largest energy producer and retailer, officially turned off the engine of Liddell’s remaining generators, marking the end of the 1,500-megawatt power station that once supplied electricity to around a million Australian homes.

Many local residents gathered at the site to say goodbye to the power station that they refer to as “the old girl.”

AGL CEO Damien Nicks, who presented at the event, praised the contribution that Liddell and its workers have made to the state of New South Wales (NSW) and the national electricity market.

“After providing the market with notice of closure more than seven years ago, Liddell has finally reached the end of its technical life, and the time has now come to safely and respectfully retire the station and join the change to a cleaner future,” he said.

“Over the past 52 years, this power station has played an important role in shaping the Upper Hunter region, providing thousands of jobs for multiple generations of people. And I thank them for the contribution they have made.

“Liddell has also played a significant role in powering Australian lives, on average, supplying enough electricity for more than one million homes over its lifespan.”

AGL CEO Damien Nicks (middle) speaks to the press at the Liddell Power Station in New South Wales, Australia, on April 28, 2023. (Courtesy of AGL Energy)

At the same time, the CEO said the shutdown was the beginning of another chapter in the company’s development as it had plans to transform the site into the Hunter Energy Hub.

“We already have plans underway to build a 500-megawatt grid-scale battery on the site, a feasibility study into a hydrogen facility is underway, and we are also exploring options with potential partners in industries such as solar, wind, and waste-to-energy,” Nicks said.

“The closure of Liddell and the repurposing of the site as an industrial renewable energy hub is an example of AGL’s climate transition plan in action–it will reduce AGL’s emissions by around 8 million tonnes per year–the equivalent to approximately five percent of emissions from Australia’s electricity sector in 2021.”

AGL’s management also outlined the process of demolishing the power station, which would start in early 2024 and complete in two years.

The company said over 90 percent of the station’s materials would be recycled and that it would retain critical infrastructure, such as transmission connections to the grid, for the future energy hub.

Regarding Liddell’s workforce, AGL said it did not implement forced redundancies and had arranged new positions for the workers in Bayswater.

“Over half of our Liddell employees will transfer to Bayswater, with the rest deciding to take retirement–as they are at that point in life–or seek other opportunities,” AGL Liddell General Manager Len McLachlan said.

Concerns over Liddell’s Shutdown

While AGL and the Australian Energy Market Operator (AEMO) have stated that Liddell’s closure would not pose a risk to the power grid, there have been concerns about its impact on electricity prices.

Andrew Richards, the CEO of the Energy Users Association of Australia, compared Liddell’s closure with that of the Hazelwood power station in Victoria in 2017.

According to the Australian Energy Regulator, following Hazelwood’s closure, average spot prices in the national electricity market soared by 85 percent compared to the previous year.

This photo shows engineers working in the control room of the Liddell Power Station in New South Wales, Australia, on April 28, 2023. (Courtesy of AGL Energy)

Prices also went up 32 percent in South Australia, while NSW and Queensland saw increases of 63 percent and 53 percent, respectively.

“The analysis we have seen is, it shouldn’t have too big an issue, but we thought that about Hazelwood too,” Richards said, reported The Australian Financial Review.

“There’s enough to cover Liddell, but it’s what replaces it that will drive the price, and if that’s gas and gas is at $30 (US$19.9) a gigajoule, then yes, prices are going to go up for a period of time.”

Likewise, Consultancy Cornwall Insight Australia anticipated that Liddell’s closure might cause wholesale electricity prices to rise in NSW and potentially in Queensland, which would eventually be passed on to customers in 2024.

More Closures to Come

The closure of Liddell comes as many Australian energy companies have brought forward plans to shut down or replace their coal-fired power station amid pressures to reduce carbon emissions.

In February, Origin Energy submitted a notice to the Australian Energy Market Operator saying it would shut down Eraring, the country’s largest power station, by August 2025, seven years ahead of the original schedule.

The 2,880-megawatt coal-fired power station has been operating since its inception in 1984 and supplies around a quarter of NSW’s electricity needs.

Origin cited “increasing, unsustainable pressure by cleaner and lower cost generation” and its transition to renewable energy generation as the main reasons for the closure.

Due to Eraring’s high generation capacity, there have been fears about the impact of the closure on NSW’s energy security.

Meanwhile, in 2022, AGL itself announced plans to retire Torrens Island B and Loy Yang A, two other coal-fired power stations owned by the company, ahead of schedule.

Its rival EnergyAustralia also made the same move in March 2021 by announcing the closure of the Yallourn coal-fired power plant in mid-2028, four years earlier than scheduled.