Key findings:
- A third of the time, Yallourn is experiencing an unexpected outage.
- Unless the Victorian Government closes Yallourn and unlocks the huge pipeline of proposed renewable energy projects, the state will struggle to meet its emissions reduction targets and more importantly keep the lights on.
A third of the time, Yallourn is experiencing an unexpected outage
Victoria's Yallourn Power Station, in the Latrobe Valley, has experienced severe operational challenges in recent years, according to a report from Nexa Advisory.
Thirty-two percent of the time in 2024, the coal-fired power station was experiencing an unplanned outage for at least one of its four generators.
“Unplanned” outages, as a category, does not include periods of time when a generator is closed for maintenance. If you include all outages, each of the four generators were down for roughly 12 weeks each year.
The ageing power station is due to close in 2028, and Nexa’s report suggests it is limping to the finish line.
Stephanie Bashir, CEO at Nexa Advisory, said:
“Right now, there is a one in three chance that there’s an unplanned outage happening at Yallourn Power Station.
“The sheer volume of unplanned outages is quite alarming for a power station that is still responsible for a significant proportion of electricity in Victoria.
“Yallourn is clearly limping to the end of its operational life. Today’s dynamic electricity market demands generators that respond quickly to price signals – coal-fired power stations were built for a different era.”
Unless the Victorian Government closes Yallourn and unlocks the huge pipeline of proposed renewable energy projects, the state will struggle to meet its emissions reduction targets.
Yallourn Power Station is responsible for approximately 12 million tonnes of CO₂ annually, partially due to the brown coal, which emits more carbon pollution than black coal used in New South Wales and Queensland.
The Victorian Government has set a 45-50% emissions reduction target on 2005 levels. Closing Yallourn by itself would represent half of the emissions reduction required by Victoria to achieve this target.
There is no shortage of clean renewable energy projects in the pipeline. There is a 16GW pipeline of proposed wind and solar projects, as well as 5 GW of proposed battery projects – and that’s not even including the various offshore wind development projects that have received feasibility licences.
The ongoing delay of new transmission projects, particularly transmission interconnectors, is a roadblock to ensuring the renewable projects are approved and connected. This poses significant threats to power system security and increases costs for consumers both large and small.
Victoria has seen ongoing transmission delays and associated cost increases – including from VNI West, which has seen a 23% cost increase in recent years. This is now not expected to be delivered before 2031 well after Yallourn closes.
Stephanie Bashir said:
“Victorians deserve clean, cheap energy – and renewable developers are lining up to build it.
“But none of it will happen without an overarching plan and clear planning approval processes for transmission and renewable projects from the Victorian Government – particularly onshore wind. These will be crucial to ensuring reliability after the closure of Yallourn.”
“A more radical approach is needed to ensure we build this critical infrastructure on time, to keep the lights on and ensure the impacts of delays are not borne by energy consumers.”
Enquiries or interviews with Stephanie Bashir:
Stephanie Bashir, Principal, Nexa Advisory
Email: [email protected]
Phone: +61 402 060 120
Report available on request
Background
Yallourn Power Station, a 1,450 MW brown coal-fired facility located in Victoria's Latrobe Valley, has been a significant contributor to the state's electricity supply since its commissioning between 1974 and 1982. Scheduled for closure in 2028, Yallourn has been experiencing increasing operational challenges, including frequent unplanned outages and high carbon emissions. These issues pose risks to Victoria's energy reliability, affordability, and decarbonisation objectives. Nexa Advisory's report assesses Yallourn's performance and outlines strategic recommendations to ensure a smooth energy transition for the state.
Summary of key findings
1. Operational unreliability and frequent unplanned outages, leading to market volatility
· Since 2020, Yallourn has averaged over 8,000 hours of downtime annually, equating to each unit being offline for more than 12 weeks per year. In 2024, unplanned outages reached an annual rate of 32%, indicating significant reliability concerns.
· The reliability risk associated with this high unplanned outage rate is also a key driver of higher market volatility and contract prices, which result in higher consumer electricity bills.
2. Low price responsiveness
· Yallourn lacks responsiveness to price signals, failing to consistently increase output during periods of high demand and market prices. This reflects that it is incompatible with today’s dynamic electricity system.
3. High emissions impact
· Yallourn emits approximately 12 million tonnes of CO₂ annually. This represents half of the emissions reduction still required by Victoria to achieve the state’s target of 45-50% reduction below 2005 levels by 2030.
Summary of recommendations
1. Commit to the on-time closure of Yallourn in 2028: Provide certainty to investors and stakeholders by adhering to the planned retirement date, facilitating the timely development of replacement renewable capacity.
2. Lean into new capacity build: Maintain the current rate of renewable energy development and deliver the 8 GW of approved wind and solar projects, 4 GW of large-scale battery projects currently in the pipeline, as well as the 26.3 GW of Victorian offshore wind projects which have received feasibility licences.
3. Accelerate near-term approvals to fast-track Victoria’s energy transition.
4. Look beyond the Renewable Energy Zones (REZs) and encourage innovative, market-led intra-regional transmission and storage projects to diversify the state’s generation and storage capacity.
5. Leverage the significant untapped potential of Consumer Energy Resources (CER) to strengthen system reliability and directly reduce consumer energy bills. We estimate there is 6 GW of potential rooftop CER capacity across Commercial and Industrial (C&I) buildings in Victoria. Additionally, the Victorian Government can further incentivise consumer energy solutions such as solar, home batteries, electric heat pumps, Electric Vehicles and demand-side participation to support the state’s renewable energy and emissions commitments and minimise reliance on gas during peak demand.
About Nexa Advisory
Nexa is an advisory firm with an unwavering focus on accelerating the clean energy transition, in a way that provides secure, reliable, and affordable power for consumers of all types.
Nexa Advisory is a team of experienced specialists in the energy market, policy and regulation design, stakeholder engagement, and advocacy.
Nexa Advisory stands at the nexus of the energy sector’s complex web of stakeholders. We support and direct their dialogue so as to remove the roadblocks to the transition.
We have a track record in policy creation, advocacy, political risk assessment, and project delivery. We are holistic in our approach and deliver solutions with people in mind, and commercial intent.