France’s ENGIE announced that it will shut down its aging Hazelwood plant in Victoria’s Latrobe Valley by the end of March next year.
The 1,600 megawatt power station employs about 750 workers, 450 of which are direct employees and 300 contractors. The closure will result in the loss of hundreds of jobs, with the company to retain the services of about 250 people between 2017 and 2023 to manage the mine and power station site rehabilitation.
Mr Alex Keisser, Chief executive of ENGIE in Australia, said keeping the power station operational was no longer economically viable in the current market environment.
“Hazelwood is now more than 50 years old. It has been a wonderful contributor to the National Electricity Market but we have now reached the point where it is no longer economic to operate,” Mr Keisser said.
“ENGIE in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation. Given current and forecast market conditions, that level of investment cannot be justified.”
He said the company has looked into a number of options to keep the business running, including revamping existing infrastructure, repowering with gas-fired gas turbines or biomass or reducing the number of operating units.
“None of these options has proven to be economically viable and as a result, the extremely difficult decision has now been taken to close all eight generating units by 31 March next year,” Mr Keisser added.
According to Mr Keisser, all departing ENGIE employees will receive their entitlements, including a redundancy package.
“I understand this is a very difficult time for our people who have worked so hard over the years to produce up to 25 per cent of Victoria’s electricity needs. All Hazelwood employees, past and present, are to be congratulated on their contribution to the production of the competitive, reliable electricity which has underpinned the Victorian economy for more than 50 years,” Mr Keisser added.
“We also appreciate that this decision will have a significant impact on the Morwell and broader Latrobe Valley communities and we will work with regulators, unions and the local community to ensure an orderly closure, including rehabilitation of the mine and remediation of the power station site.”
ENGIE in Australia also announced that it will appoint a financial adviser for the possible sale of the 1,000 megawatt brown coal fired Loy Yang B power station in the Latrobe Valley and the 122 megawatt Kwinana gas-fired plant in Western Australia.
The Loy Yang B coal power station provides up to 17% of Victoria’s power needs, while the Kwinana co-generation facility supplies steam and electrical power directly to the BP Australia Kwinana Oil Refinery and electricity only to the state-owned utility, Synergy.
“As the newest and most efficient brown coal fired-power station in the Latrobe Valley, Loy Yang B will be attractive to potential investors. Similarly, Kwinana holds a unique position in the WA energy market that may attract interest from both local and overseas investors,” Mr Keisser said.
“However, it is important to stress that we would only consider a sale of these valuable assets if they met our shareholders’ requirements. If a sale process were to proceed, it would be expected to be completed by late 2017.”