You have recently started working for an independent Queensland senator who will be sitting on federal parliament’s electricity generation review committee. As an independent, she has no direct allegiances with any political party. The senator is highly aware of the considerable debate around whether coal fired power stations are economically viable and has requested that you analyse and report on the economic viability of a new ultra super critical (USC) coal fired power station to be built in Queensland. Specific details of the task are provided below. Your report will assist the regulators in regulating electricity price and government subsidy.
Task:
You are to provide a detailed financial analysis of an USC coal fired power station under two scenarios used in the Finkel Review (2017). The scenarios are:
1 Business as Usual (BaU) The electricity market remains in a prolonged period of uncertainty due to limited government action on carbon pricing and abatement. The price of electricity is higher under this scenario. 2. Emission Intensity Scheme (EIS) Government to introduce an EIS where electricity generators that emit more than 600 kilograms of carbon per megawatt hour (MWh) of electricity must purchase carbon permits while those that emit less receive permits that they can sell. Permits will need to be purchased for the USC coal fired power station. The electricity price is lower under this scenario.