The ongoing uncertainty over the future of the Hazelwood power station in Victoria’s Latrobe Valley has raised the prospect that the ageing generator will be shut down in the near future.

The power station has a nameplate capacity of 1.6 gigawatts, which represents 22% of the coal-fired generation capacity in Victoria, and 6% of the total coal-fired capacity in Victoria, Queensland and New South Wales combined (South Australia no longer has an operating coal-fired power station).

Coal-fired power stations provide the bulk of the “baseload” electricity requirements in the National Electricity Market (NEM). Baseload refers to generation that meets the minimum demand, and from an economic point of view this is best delivered by generation that produces constant, reliable output. Brown coal provides the cheapest baseload power – or at least, it does if we’re prepared to ignore factors such as the long-term costs of climate change.

So if Hazelwood departs the market, as one of the cheapest generators in the NEM, it seems logical that electricity prices will increase. The extent of that increase will depend on what takes up the slack. So what can we expect to happen?

Read the full article on The Conversation.

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