Next Investors logo grey

Hazelwood Power Station Goes Offline

Published 30-MAR-2017 11:46 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Opened in 1971, the Hazelwood power station shut off its last brown coal powered turbines on March 29.

The controversial station was the least carbon efficient power station in the OECD, according to a 2005 report from WWF Australia; making it one of the least efficient power stations on earth. It supplied around 25 percent of Victoria’s electricity, and about 5 percent of the Australian electricity supply.

The majority owner of the station is French company ENGIE, whose largest shareholder is the French government. Following a petition from Environment Victoria, the French Environment Minister announced in May 2016 that ENGIE would “disengage” from Hazelwood; sealing the fate of one of Australia’s oldest power stations.

Local member Russell Northe described the mood in the Latrobe Valley, where Hazelwood is located, as “sombre” this week.

The closure of the plant could add to the volatility to Australian electricity markets, potentially worsening our power crisis. The Australian Energy Market Operator estimates that unless change is made, we will not be able to meet our electricity needs in two years’ time.

Electricity futures prices for the April-June quarter are now three times what they were a year ago, and the volatility is likely to lead to increases in retail electricity prices. In fact, the electricity market in Australia is looking bad enough for Bloomberg to ponder in a recent article “Why Resource-Rich Australia Can’t Keep Lights On”.

Most of the talk about the energy crisis has focused on natural gas and gas-fired power plants, which the Liberal Government, and many electricity and gas suppliers expect fill the dearth of electricity. Australia has the biggest gas reserves in the Asia-pacific region outside of China, but two-thirds of it is exported, and the remaining third is often more expensive to purchase here than it is overseas.

There is a war of words going back and forth between politicians and gas exporters, each blaming the other for the curious economics of Australia’s domestic and export gas markets.

However, there is little talk over an increase in renewables investment to help fill the void, despite the fact that renewables can now generate electricity cheaper than fossil fuels in Australia. Indeed, Tesla CEO Elon Musk recently announced that he could solve South Australia’s energy problems in less than 100 days by building battery storage for excess renewable generation.

Regardless of your beliefs on Australia’s energy mix, it seems our’s is an energy market in transition. We are moving beyond the old coal fired power plants that supplied us during the 20th century, and towards new gas fired and renewable energy technologies.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.