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Feb 05, 2021

State-owned power plants in $1b-plus write-down

State-owned power plants in $1b-plus write-down

More than $1 billion has been wiped off the value of coal and gas power stations owned by Queensland electricity generators CS Energy, Stanwell and CleanCo in the past year.

report from the Queensland Audit Office showed that lower electricity prices resulted in combined net losses of $367 million for the State-owned generators in 2019-20 and a decline in the value of power stations.

Transmission, distribution, and retail entities all reported net profits, but they were 26 per cent lower than the previous year.

The report summarises the audit results of Queensland’s six energy entities in generation (CleanCo, CS Energy and Stanwell), transmission (Powerlink), distribution and retail (Energy Queensland, Ergon Energy).

Across the sector the energy entities recorded a combined profit of $204 million last financial year – down $1.5 billion (88 per cent) from the previous year.

The generators assess the value of their power stations annually and during the past year they determined that the future amounts they could recover from use or sale of their coal and gas power stations were less than their current recorded value.

The Queensland Audit Office report showed that each of the generators wrote down (decreased) the value of their power stations as follows:

  • Stanwell: $720 million (19 per cent of total assets)
  • CS Energy: $353 million (15 per cent of total assets)
  • CleanCo: $35 million (eight per cent of total assets).

The report showed that Stanwell’s and CS Energy’s coal-fired power stations generated 68 per cent of the state’s electricity in 2019-20.

Although Stanwell and CS Energy decreased the value of their coal power stations, they expect them to remain profitable until their scheduled retirement over the next 26 years.

The reduction in value was largely due to declining electricity prices attributed to:

  • reduced electricity demand as a result of COVID-19
  • increased generation from renewable sources
  • lower gas prices—which increased the electricity supply from gas power stations.

CleanCo reduced the value of its 385 MW Swanbank E gas-fired power station, near Ipswich, to zero. It expects to earn net losses from running this power station until its expected retirement in 2036.

The report also stated that increased solar generation during the middle of the day had meant that supply for electricity was sometimes so much greater than demand that power generators have had to pay the market to take the electricity they generate.

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