Australian power generator switches from gas to coal

Queensland state-owned power generator Stanwell Corp. has decided to mothball its largest natural gas-fired electric power station in October for as long as 3 years.

The 385-Mw Swanbank E combined-cycle gas turbine station, near Ipswich about 40 km west of Brisbane, was commissioned just 12 years ago. In its place, Stanwell plans to recommission one of the 1980s-built coal-fired generators at the 1,400-Mw Tarong power station 200 km northwest of Brisbane, although the timing of its return to service is not yet decided.

The switch from gas to coal has come following subdued market conditions and increasing gas prices in recent times.

Stanwell Chief Executive Officer Richard van Breda says the utility will sell the gas it would have used at Swanbank E back onto the market where it can earn more revenue that using it in electricity generation.

Stanwell’s gas is supplied by British Gas, Santos, and Arrow from fields in the Surat and Bowen basins.

It is the first time a gas-fired power generator will be shut down, but observers predict it might be the first step in the substitution of gas by coal in the eastern Australian power generation network.

High export prices for gas are drawing supplies to the Gladstone LNG projects and this has led to supply challenges for some domestic gas users.

Stanwell’s plan will be regarded as a good thing by the coalition-led Federal government of Prime Minister Tony Abbott, which says markets should be allowed to operate to achieve the lowest-priced electricity. However climate change campaigners regard it as a backward step and it will strengthen arguments to retain Australia’s carbon tax regime put in place by the previous Labor government.

The Abbott government plans to repeal the tax after the senate elections in midyear when it hopes to have the numbers in the Upper House to do so.

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