By Jo Nova
Brown coal is the best kept secret in Australia
Imagine, in this cost-of-living crisis, if the nation discovered a 430 billion ton deposit that could produce electricity at a tenth the cost of gas and hydroelectricity? What a bonanza — the people could live like kings with heated pools, large homes, indoor spas and businesses would flock to the state to set up production lines. The state would become a trade giant and a mecca for tech.
Then imagine they let themselves be spooked into not using it for fear it would cause bad storms in a hundred years? Like the country is run by teenage girls…
Despite the costs of everything rising in 2024, the brown coal plants in Victoria are still offering to supply wholesale electricity at $8 per megawatt hour (which is 0.8c per kilowatt hour). That’s the average winning bid from brown coal plants across Quarter 1, 2024.
In the chart below of the last five years of quarterly prices, we can see that every single quarter brown coal power is the cheapest source of electricity there is bar none. (Wind and solar power, with their crazy negative prices, don’t count because they’re subsidized up-the-kazoo. Their real cost is paid through other hidden means. It’s either that, or the negative prices tell us wind and solar power are so awful you have pay people to take those toxic electrons away…).
In the last quarter brown coal set the winning bid price about 15% of the time. These were the times when there was enough brown coal power in Victoria that the grid managers didn’t have to buy any black coal, gas or hydro power at all.
The more coal power Victoria has, the more often the wholesale price will be insanely low…
Because of the way the auction works, the highest successful bidder sets the price for everyone. In theory, generators are supposed to bid the lowest price they’d accept and then the AEMO takes the cheapest offers first until it meets the full demand.
And it’s the same all across the Eastern Coast of Australia — in New South Wales was getting bids from brown coal generators at $12 per megawatt hour. In South Australia, $11. In Queensland $13, and in Tasmania $7.
DATA
The AER has the data on the price setting bids. NSW | QLD | Victoria | SA | Tas