LOY Yang B power station, fresh from the best performance of its 30-year existence, is investigating new ways to decarbonise, including possible conversion to sustainable biomass and using carbon capture and storage (CCS), as part of its aim to remain an integral part of the energy market in the transition towards net zero emissions.

The power station’s research and development program to reduce its greenhouse emissions also includes possible hydrogen production to power fuel cell vehicles, according to its Sustainability Report 2022. This approach would also ensure that the power station’s big economic presence in the Latrobe Valley will remain and potentially grow.

Loy Yang B, which has two 570 megawatt units that together can produce 1140MW of electricity – about 20 per cent of Victoria’s energy – tends to be the largely forgotten cousin of its big neighbour, the AGL-owned Loy Yang A power station.

However, taken together, the Loy Yang complex can produce about 3400MW, so is effectively the largest power station in Australia and produces up to 60 per cent of Victoria’s electricity.

It’s no ‘clunker’ or one of these so-called ‘ageing, unreliable Latrobe Valley brown coal power stations’ we hear about; its power generation availability factor remained strong at 98.88 per cent in the past financial year, the 2023 Sustainability Report noted. This was down fractionally on the previous year’s 99.31 per cent.

This tiny drop was mainly due to a 34.3 per cent rise in market offloading; the electricity was not needed because of the increase in renewables.

“Our plant is better equipped to ramp down when the market is adequately or oversupplied by renewables due to our investment of more than $160 million in the major upgrades to our units in 2019 and 2020,” the 2023 Sustainability Report said.

The general manager, Tony Hicks, put the plant’s strong performance down to two major factors – the quality of both the power station when it was built in 1993 and 1996, and the workforce.

The former State Electricity Commission built the first two units, but Units 3 and 4 were not needed and did not go ahead.

“The last power station built, it learned the lessons from Loy Yang A and Yallourn power stations. It was built to stay on and be reliable. It was constructed well, commissioned well, designed well,” Mr Hicks said in an interview with the Express.

When privatised in 1993, it was bought by Edison Mission Energy, a subsidiary of Southern California Edison.

“The company was progressive in terms of ownership style. It recruited differently, focussed on behaviours and competence, not just the technical side – so we ended up with quite a robust workforce that was culturally aligned with Edison, at a time when the SEC was reducing in size. We ended up with a very good workforce,” he said.

“The combination, after 30 years, was our best performance year ever in 2022. The performance continues to improve – that is the result of the workforce, the culture here, the ethic of continuous improvement. We are always looking for opportunities to do things better, we have never been capital constrained like some business have.

“Loy Yang B continues to be well maintained. Right from day one, there has been a strong preventative maintenance regime, and that approach has continued all the way through.”

Loy Yang B is a company within the Alinta Energy group, and has a great deal of autonomy. Alinta is owned by Chow Tai Fook, a private investment holding company of the Cheng Family in Hong Kong. The power station has about a 160 permanent work force and up to 40 contractors on site at any time, but this can become 400-500 contractors during outages.

Mr Hicks is a Latrobe Valley electricity veteran.

Born in Morwell, he went to Morwell Technical School and joined the SEC aged 16. He became an operator and supervisor at Loy Yang B, then production manager at Hazelwood power station in 2007 before becoming general manager at Loy Yang B in 2016 before Hazelwood closed.

“We focus now on reliability. This will become even more critical. When Yallourn closes in 2028, just the Loy Yang complex will be left in terms of the coal-fired fleet. We will have to make sure reliability is strong to support the renewable transition,” he said. With wind and solar energy weather-dependent, “thermal coal plants will need to provide system stability when the wind is not blowing”.

“We need lots of storage to replace coal plants before they are shut down,” he said.

In 2019/20, Loy Yang B spent about $170 million on upgrading the turbines.

“Both units are brand new turbines. We’re in the best position ever in terms of critical spares for all our major components, so if we have a failure, we can minimise the down time as we have the parts ready to install. We’re in a really good position from a reliability point of view,” he said.

Mr Hicks said there was now more talk about system security and reliability.

“We all accept we have to transition to zero net emissions, but there is more recognition that coal plants have a role to play in supporting the transition, not preventing it; that is certainly our view,” he said.

The year 2047 remains Loy Yang B’s formal closure date, but the view of Alinta Chief, Jeff Dimery, is that “Loy Yang B will continue to run until it is not required”.

“We will not shut down a day before that; 2047 is our end game, but we are not in a position to nominate a year when we are no longer required, nobody is,” Mr Hicks said.

“Government has aspirations to have all coal out by 2035, based on renewable energy targets, but we’re intending to be more responsive to what the market needs; what the system needs will determine Loy Yang B’s future.”

To this end, when the new owners Alinta took over in 2018, they encouraged ways to decarbonise Loy Yang B.

“There are lots of projects we are looking at, everything from batteries to fuel conversions are in early feasibility stages,” Mr Hicks said.

Mr Hicks said the regional economic benefit of Loy yang B was more than $100 million a year.

“We purchase services and materials locally where possible. With wages, that is a significant contributor to the local economy,” he said.

Loy Yang B has a lot of life left in it.

“As a power station, it has a lot more to offer, a workforce that has a lot more to offer, a lot of inhouse capability, engineering maintenance, finance, our own people and culture – autonomy and capability. We are capable of changing and moving into something else,” he said.

“The plant, even though 30 years old, is in excellent condition. As long as you do the maintenance, you can keep running. Loy Yang B has a lot of residual life left in it. It is open to reinvention and is well placed to support the energy transition.”

Leader: Loy Yang B General Manager, Tony Hicks. Photographs: Nicole Boskma