Coal burns for chance to fuel power sector

THE coal industry is readying itself for a battle to become the electricity generation fuel of choice.

Wesfarmers Premier Coal general manager marketing and business development, Barry Kelly, said the industry believed it could outdo all other fuels.

However, that promise relies on power generators buying a lot of coal.

“If we get cut back it will start to affect the viability of this industry,” Mr Kelly said.

“Premier Coal is aiming for five million tonnes a year.”

According to the Electricity Reform Task Force’s report, more than 80 per cent of the 6.5 million tonnes of coal produced in WA was used for electricity generation in 1999-2000.

That coal purchase was split between Premier Coal and Griffin Energy, with Western Power and Worsley Alumina the principal users.

In 1999-2000 the amounts of gas and coal used for electricity generation were roughly equal. Western Power’s fuel mix was about 70 per cent coal and 30 per cent gas, however, the State’s privately owned generating plants used gas.

The degree of competition between coal and gas will depend on the fuel supply contracts tied to new generation investment decisions.

ERTF member Frank Harman said the Deloittes Touche Tohmatsu report Western Power commissioned to assess the cost impacts of the ERTF’s reports threw doubt on the future of coal.

“If you believe the Deloittes report, Western Power is no longer going to have coal fired power stations,” he said.

Perth Energy director Ky Cao said the ERTF report actually laid the groundwork for another coal fired power station.

“As a retailer we want security of supply. We prefer three fuels,” he said.

A report commissioned by the ERTF called for a price of between $35 and $40 per tonne of coal Western Power currently pays up to $15 per tonne more than that.

Mr Kelly said coal could meet that price if it got bigger volumes.

He said business needed to support coal if it wanted a competitive choice and security of fuel supply.

AlintaGas manager electricity strategy Andrew George said no single fuel supplier should be given preference in the reform process.

“These reforms are about giving the job to the operator who can do it the best,” he said.

The sustainable energy industry is relishing its political clout.

Both the gas and the coal industry are quick to point out that there is room in the mix for green fuels.

In addition, the WA Greens, big supporters of green electricity, hold the balance of power in the upper house and are likely to be instrumental in getting new electricity laws passed.

Sustainable Energy Industry Association chairman Matthew Rosser said green power would play an important role if WA was to meet the Federal Government’s Mandatory Renewable Electricity Target that requires 2 per cent of WA’s electricity to come from green sources by 2010.

He said the industry would also be valuable from an employment point of view because most renewable energy projects would be situated in regional areas.

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