Why are electricity providers shutting down Australia’s power plants?

Table of Contents
Between 2011 and 2017, approximately one-third of Australia’s coal-fired power stations were permanently closed, and the remaining 16 are scheduled to be closed in the coming years. With Australians still heavily reliant on coal for electricity, why is this happening now?

This page will explore the future of Australia’s coal-fired power plants.

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The End Of Coal

In recent years, coal has become a problematic, expensive primary source of power, not to mention the fact that it’s the dirtiest energy compared to the newer, cleaner, cheaper renewable options. Three main factors are driving Australia’s power suppliers to make coal a thing of the past.

Australia is part of a global movement of nations that are working towards reducing carbon emissions in the fight against climate change. Although in the past we have copped some criticism for not matching the targets of other countries, we currently have some ambitious and realistic goals to make Australia a net-zero nation by 2050.

In May 2022, the government unveiled the latest plan which has an interim goal of a 43% reduction of greenhouse gases by 2030, compared to 2005 levels.

So what does this have to do with the power stations? Well, coal-fired power plants are responsible for approximately 30% of the country’s greenhouse gases. So in short, to meet the net-zero goal, they have to go. Power companies have been coming under increasing pressure from the public, environmental groups and the government to bring forward the move away from coal.

  • State policies

Each state and territory has set their own goals, based on its current energy mix and resources, to work towards the federal target. These individual goals are summarised in the table below.





Net zero 


43% reduction from 2005 emissions levels



95% of electricity from renewables


New South Wales

50% reduction from 2005 emissions levels



80% of electricity from renewables


South Australia

100% of electricity from renewables



100% of electricity from renewables

Completed in 2020

Western Australia

80% reduction from 2020 emissions levels


Northern Territory

50% of electricity from renewables



200% of electricity from renewables


Coal is currently the primary source of 67% of Victoria’s power, 75% in New South Wales and 65% in Queensland.

This heavy reliance on coal threw the energy sector into chaos in early 2022, when the perfect storm of ongoing COVID-related transport issues and the war in Ukraine combined to send international coal prices through the roof. Add to that Australia’s record early winter cold snap, and we found ourselves in a serious power crisis that is ongoing to this day.

It’s crucial that Australia takes steps to protect itself from any future power crises. We can do this by transitioning away from a reliance on coal and towards domestic power sources. This will involve protecting our wealth of natural gas as well as heavy investment in large-scale renewables including solar power and hydroelectric power.

Australia will need to make a huge investment in the coming years in transmission lines and storage upgrades to make this a reality, but the result will be a cleaner, cheaper, and more reliable domestic source of electricity, protecting our energy for generations to come.
A coal-fired power station is designed to last between 40 and 50 years, although the real lifespan has been shown to be around 29 years.

As of early 2017, approximately 75% of Australia’s coal-fired power stations were running beyond their original design life. The Australian Energy Market Operator (AEMO) expected that 14 GW of coal-fired generation would need to be retired by 2040, even without the planned closures.

As you would expect, the old power stations are inefficient, carbon-intensive, unreliable, and increasingly expensive to maintain, leading power companies to question, with the improvements in renewables, is it worth the cost of maintenance to keep them open.

From a purely financial perspective, it makes sense for power suppliers to move their focus to renewables which will lead to the cheaper, more reliable generation of electricity as well as economic growth, job creation, and a positive environmental impact.

A spokesman for the Climate Council said “Coal is unable to compete on cost with renewable energy, it is also inflexible, aging, unreliable, and inefficient.”
Australia’s power plant

Who Is Responsible For Closing Australia’s Power Plants?

While the closure of coal-fired power stations is part of a bigger national and global movement, the decision on when to close individual plants comes down to the owners.

Who is responsible for closing Australia’s power plants?

In Australia, the majority of the power stations are owned by the “Big Three” energy companies – AGL, Origin Energy and EnergyAustralia. Their plans are discussed below.
In September 2022, AGL announced that they plan to shut down all of their coal-fired plants by 2035, bringing their greenhouse emissions from 40 million tonnes to net zero. They own some of the largest power plants in the country and produce approximately 8% of Australia’s total carbon emissions, so this announcement is an important step forward towards our net-zero goal.

This includes the closure of the large Liddell and Bayswater power stations in NSW and the Loy Yang power station in Victoria, which currently provides nearly a third of the state’s electricity.

This news was welcomed by environmentalists – Loy Yang is the country’s dirtiest power plant, producing more than 3% of Australia’s carbon emissions, which is around 16.6 million tonnes. However, others are concerned that the closure has been brought forward a decade earlier than planned, with the possibility it will lead to a supply shortage if the generation capacity of renewables doesn’t increase to meet demand in time.

To maintain its generation capacity, AGL will invest up to $20 billion in renewable energy generation and storage technology. As a result of the announcement, AGL shares shot up by 19 cents, so they must be on the right track!
Eraring, Origin’s only coal power station, is a relatively new addition to their portfolio, having bought it from the NSW government 10 years ago. They have announced plans to close it in 2025 – seven years ahead of the original closure date in 2032.

The power station emits over 13 million tonnes of carbon per year, so its closure will make a big impact on the road to net zero.

However, the decision to close the plant early has been driven more by economics than environmental responsibility. The CEO has stated that “the reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower-cost generation, including solar, wind and batteries.”
EnergyAustralia has also brought forward plans to close their coal-fired stations, with Mt Piper, NSW closing in 2040, 3 years ahead of schedule and Yallourn, VIC in 2028, four years earlier than planned.

In its place, EnergyAustralia will create a new 350 MW, four-hour, utility-scale battery project. This is planned to be completed by 2026 in order to secure the power supply to Victoria before the closure of Yallourn.

  • Scheduled closures
Take a look at the table below to see the planned closures for all of Australia’s coal-fired power stations.
  Power station Scheduled closure Owner
New South Wales Bayswater 2033 AGL
Eraring 2025 Origin
Liddell 2023 AGL
Mt Piper 2040 EnergyAustralia
Vales Point B 2029 Delta
Queensland Callide B 2028 CS Energy, Intergen
Callide C Not Announced CS Energy, Intergen
Gladstone 2035 Rio Tinto, NRG
Kogan Creek 2042 CS Energy
Millmerran 2051 Intergen
Stanwell 2046 Stanwell
Tarong 2037 Stanwell
Tarong North 2037 Stanwell
Victoria Loy Yang A 2035 AGL
Loy Yang B 2047 Chow Tai Fook, Alinta Energy
Yallourn Power Station 2028 EnergyAustralia
Western Australia Collie 2027 Synergy
Muja 2022 Synergy
Bluewaters Not Announced Sumitomo Group, Kansai Electric

Are there any risks with the closure of power plants?

Are there any risks with the closure of power plants?

While it’s easy to see the benefits of moving away from coal, there are also some risks involved. The main risks are:
Power stations create hundreds of jobs in the local community, both through direct employment and indirect services engaged from local businesses. 

When Yallourn power station closes, the local council predicts the loss of hundreds of local jobs, with a significant impact on the local economy. In response, EnergyAustralia has pledged that Yallourn’s workforce will be supported with a multimillion-dollar package to help them plan, reskill or retrain for their future, on top of their standard worker entitlements.

In addition, the local council receives significant rates from the power station, which are put towards local projects and works. The Latrobe Council lost an estimated $2 million in rates when the Hazlewood power station closed, with more losses on the cards in 2028 when Yallourn closes its doors.
When a large amount of electricity is taken out of the grid in a short amount of time, the decreased supply pushes energy prices up. When Hazlewood power station closed in 2017, the average price was up 85% when you compared energy in Victoria to the previous year. Prices were also up all over the National Energy Market (NEM), with costs up 32% in South Australia, 63% in New South Wales, and 53% in Queensland.

To prevent this from happening when future closures take place, the supply will need to be replaced by renewable or other energy generation sources. The concern is that, because there is no national roadmap to coordinate the closures, there will not be a smooth transition which could result in short-term pain for customers.
As well as skyrocketing prices, the lack of a national plan for coal closures means that, in the worst-case scenario, communities will be left without power. 

As well as replacing the generation capacity of coal, there needs to be significant work undertaken to upgrade the national grid to make it suitable to transport energy from renewable sources around the country.

Because the power station closures are being managed on an individual basis by their owners, there is no coordinated plan to make sure the NEM is ready for the transition at the same time.

The Power Crisis - CheapBills

Australia was once considered the climate policy laggard, with uninspiring targets and seemingly a commitment to coal over the environment. However, we now have some ambitious targets that will see us reach net-zero emissions by 2050 and do our part in the fight against climate change.

At the same time, we will protect ourselves from any future power crises with a reliable, domestic source of cheap renewable energy and retire our ageing coal-fired power stations, cutting the losses on the expensive maintenance needed to keep them running.

However, there are some concerns with the transition to renewables. There is no national roadmap to make sure the closure of the coal-fired power stations won’t result in power shortages and soaring energy costs. And undeniably, the closure of one of Australia’s biggest industries will result in hundreds of job losses to the detriment of local communities.

Renewable energy is the way of the future, so now it’s up to Australia to make sure it works for us!

If you’d like to read more about the topics covered on this page, check out the links below:

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