Liddell Power Station closure: where will our energy come from? Are we ready?

Australia's oldest operating coal-fired power station was pumping out 2000 megawatts - about 13 per cent of the state's electricity - until the first of its four turbines were shut down last year.

At the same time, the plant, like an old car, was becoming increasingly difficult to maintain at full capacity - it had to be restarted 335 times in the last year alone.

Today the 52-year-old plant's 168-metre tall chimneys stand like sentinels that beckon back to an era when cheap, coal-fired electricity was synonymous with economic prosperity.

It was also a time when concern about climate change didn't rate a mention and the idea that renewable energy could reliably provide baseload power was little more than a pipedream.

In more ways than one, the end of the Liddell era represents a major fork in the road on Australia's journey to a clean energy future.

AGL is Australia's largest greenhouse gas emitter. Turning off Liddell will reduce the company's emissions by 17 per cent.

While most will celebrate that milestone, the broader question becomes: are we ready? can we afford to lose an estimated 1700 megawatts of power from the grid when many parts of the renewable energy future remain in their formative stages?

As if to underline this point it has been necessary for NSW to import energy from Victoria and Queensland to shore-up the state's energy supply in recent times.

The state's new energy minister Penny Sharpe acknowledged the challenges resulting from the loss of Liddell, but she remains optimistic there will be enough replacement capacity to compensate for its loss.

"Based on the advice that I've got, it makes it a challenge but it has been planned for," she said.

"The real issue here is what happens in the next three to five years and making sure we get as much renewables into the ground as quickly as possible, that we have the firming and storage technology in place so when the wind doesn't blow and the sun doesn't shine we can get energy to households and into businesses."

Australia's Energy Market Operator (AEMO) also believes there will be enough replacement capacity.

It points to the fact that since the closure of Liddell was announced in 2017, renewable energy generation has more than quadrupled and now accounts for more than twice the output of Liddell at full capacity.

But, as the critics of renewable energy point out, intermittency remains the weakest link in the clean energy transformation.

Firming projects, such as the gas-fired Hunter Power Project at Kurri and the Waratah Super Battery at the site of the former Munmorah Power Station are yet to come online.

The super battery project, to be built by Transgrid, received final planning approval in February and is due to commence operating in 2025.

Snowy Hydro's new Kurri peaking plant was originally intended to be online to coincide with the closure of Liddell, however, delays caused by slow supply chains and wet weather have meant the project will not open until late 2024.

Other new firming projects outside the region include the Tallawarra gas-fired power plant in Wollongong and Snowy 2.0's pumped hydro project.

It's a balancing act, but the bottom line is that the electricity grid will probably avoid major supply shortages next summer but risks escalate in later years as ageing coal plants exit potentially faster than new renewables and storage projects come on line.

"These gaps widen until all mainland states in the NEM are forecast to breach the reliability standard from 2027 onwards, with at least five coal power stations totalling approximately 13 per cent of the NEM's total capacity expected to retire," AEMO chief executive Daniel Westerman said.

"Urgent and ongoing investment in renewable energy, long-duration storage and transmission is needed to reliably meet demand from Australian homes and businesses."

With Liddell gone, attention will shift to Lake Macquarie's 2000 megawatt Eraring Power Station, which supplies about 25 per cent of the state's electricity.

Origin Energy sent shock waves through the energy market when it brought the plant's closure date forward by seven years to August 2025.

The 2800 megawatt plant's prospective new owners, Brookfield, insist it won't close until there is sufficient replacement capacity in place, but they make no secret of the fact they want it closed sooner rather than later.

"We are not going to shut down Eraring until we have built the renewable and storage capacity and it's in operation such that we can responsibly do that," Brookfield chairman Mark Carney said.

But the question of whether the state government should play a role in keeping it open beyond 2025 remains a lingering question.

Ms Sharpe said last week that ensuring security of supply would be the government's overriding priority.

"We're not saying that we're going to be closing it down in 2025. We'll be working with the operator and we'll be working very hard ... to make sure that the battery storage is there, that the firming technology is in place. We will make sure that energy security continues regardless of whether it's renewables or other baseload," she said.

Deputy director of the Grattan Institute's Climate Change and Energy program Alison Reeve said while the path to a clean energy future may change, the overriding goal needed to remain in focus.

"All transitions are difficult. It's not hard to imagine a future state and it's not hard to understand the present state, but going through the transition is the hardest part," she said.

"Getting through a transition successfully means that you need to be really, clear about what the important goals are, rather than focusing on what the particular pathway is. The pathway will be dynamic and it will change a lot.

"But the goals are to keep the lights on, keep energy affordable, and don't blow out the 2030 2050 emissions targets."

For Climate Council Senior Researcher Carl Tidemann, the closure of Liddell can't come soon enough.

"There is an abundant pipeline of renewable energy projects firing up to replace Liddell's capacity. Australians are feeling the pinch with their power bills, so the sooner we get off unreliable coal-fired power and expensive gas by switching to 100 per cent cheap and reliable renewables, the better," he said.

"AGL gave six years' notice of Liddell's closure, which has allowed workers and the industry time to prepare for a smooth and managed exit. This is a textbook example of how the transformation of our energy system can work."

Nexa Advisory chief executive Stephanie Bashir, who previously worked as AGL's senior director of public policy, agreed the shutdown of Liddell represented a major step in the clean energy transition.

"The shutdown of Liddell will be a test but NSW has spent seven years planning the electricity roadmap which is underpinned by a strong policy framework. The transition process is robust to support this; both to ensure security and reliability of supply, and good outcomes for NSW consumers," she said.

"AEMO has confirmed that there are no reliability issues predicted with the Liddell closure. This planned shutdown cannot be compared to the sudden shut down of Hazelwood, the impacts of which drove significant spikes in wholesale electricity prices.

"This is a big first step. We now need to maintain focus on supercharging the transmission build out, which is the key bottleneck to renewable energy generation and storage. Transmission infrastructure will be the key to keeping the lights on. Modelling shows that any delays in building transmission only increases capital costs. So the best time to do this is now."

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