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AGL has daily struggle to keep 'geriatric' Liddell coal plant running

AGL has daily struggle to keep 'geriatric' Liddell coal plant running

AGL Energy faces "a huge daily challenge" just to keep its "geriatric" Liddell coal-fired power station running and will need to spend up to $150 million just to "keep our noses above water" until 2022, according to a senior executive.

"It's exceptionally challenging," AGL Macquarie general manager Kate Coates said at the 46-year-old Liddell operation in the NSW Hunter Valley.

The plant is limping along as she speaks, with one of four turbines down for its three-yearly maintenance, another out of action due to an unexpected "complex" failure, and the other two are running well below capacity to minimise the chance of them also breaking down.

Out of Liddell's 2000 megawatt original rated capacity, just 840 MW is available as AGL hosted a media visit to the high-profile plant site, north of Singleton on Tuesday.

"We're dealing with a very, very old plant which has a multitude of technical problems. We are also struggling with getting coal up to our stations at the moment," Ms Coates said.

"We have a number of age-related issues we are dealing with: corrosion, erosion, wear-and-tear, vibration-induced fatigue."

Ms Coates said the plant is "certainly profitable" but wouldn't say how much it makes.

Under intense pressure from the federal government to keep Liddell running past its slated 2022 closure date, AGL is holding firm to its stance that the investment required would be better spent on new capacity more appropriate for the lower carbon, more flexible power supply system needed for the future.

Ms Coates pointed to an independent estimate in 2013 by WorleyParsons for the then Liddell owner, the NSW government, that some $900 million of investment would be required to keep the generator going for 10 years past its 50-year rated life.

While the numbers are being re-examined as part of AGL's work to decide the fate of the plant, the estimate "feels about right," Ms Coates said.

Fatigue in the tubes in the four huge boilers is the biggest issue. While the rate of failure has been halved since AGL acquired Macquarie Generation in 2014, it still budgets for about 12 failures a year, incurring costly expenditure to replace burst pipework.

The coal conveyor system and the ash disposal system are also "highly compromised", requiring significant work, while the insulation systems are degrading with water starting to leak into the electrical system, Ms Coates said.

AGL chief executive Andy Vesey last week promised to return to the federal government within 90 days with more detail of the company's plan to replace the capacity to be lost with Liddell's closure with a combination including gas-fired peaking plant, renewable power generation, and "demand response".

Chief economist Tim Nelson said it was up to AGL and the rest of the industry to demonstrate that the 4000 MW of capacity that is under construction or has got the go-ahead will have an impact in increasing supply and so helping rein in prices.

"It is really incumbent on us to not only get on with the investment that is under way but to work with the government to demonstrate that it's not just about extra supply, it's about the right type of supply, the supply that is flexible that can meet those summer peaks when demand skyrockets as a result of very hot weather," Dr Nelson said.

Ms Coates was unequivocal that she believed the best option for Liddell was to close the plant in 2022 as AGL has committed to, and to consider how to re-purpose the site to make use of some of its valuable infrastructure.

Australian Financial Review

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