The Hunter Valley power station at the centre of a political fight over energy is operating at below half its rated capacity and would present "mammoth problems" for any company seeking to extend its life, a former senior Macquarie Generation engineer said.
Prime Minister Malcolm Turnbull is due to meet Andy Vesey, AGL's chief executive, on Monday to discuss his company's plans to close its Liddell power plant in 2022.
The PM on Wednesday said intervening to keep Liddell open was "clearly an option" to head off future power shortages. The Australian Market Energy Operator said earlier this week Victoria and South Australia face electricity supply shortfalls as early as this summer, while NSW could endure a similar squeeze after Liddell shuts.
However, a retired senior engineer, who worked at the neighbouring coal-fired Bayswater plant and had frequent discussions with Liddell counterparts, said Liddell was known "to have massive problems".
"It's just never been a good plant," the former Macquarie Generation engineer said, requesting anonymity. "It's never been reliable."
In the worst instances, three times the plant's equipment had oil supply failures that led to turbines grinding to a halt in about 10 minutes compared with 40 minutes under normal conditions, "basically wrecking" the machinery.
The engineer also noted how Liddell routinely has at least one of its four units out of operation, and that half of the four units were suddenly unavailable on February 10 - the first day of a record NSW heatwave - due to leaks in boiler tubes. That poor performance was despite its turbines being replaced about a decade ago.
AGL, which valued Liddell at zero dollars when it bought it in 2014, declined to comment about its reliability.
Dylan McConnell, a researcher at Melbourne University's Climate & Energy College, said Liddell operated at just 39.6 per cent capacity in August.
That level was about half the capacity utilised of Victoria's aging Hazelwood power plant in the final year before its closure in March. (See Melbourne University chart below using AEMO data.)
Mr McConnell noted Mr Vesey implied in comments reported a month ago that Liddell's available capacity had already been reduced from its original 2000-megawatt rating.
"When Liddell reaches the end of its life in 2022, 1680 megawatts of effective capacity or about 8000 gigawatt hours of annual energy will be withdrawn from the [National Electricity Market]," Vesey was reported as saying.
An AGL spokesman later confirmed to Fairfax that "due to age and reliability issues", the four units are now rated at 420 MW each.
"Safe generation levels at Liddell are driven by a number of factors including market demand, plant outages and maintenance but more critically at present access to coal supply," the spokesman said.
Planned closure
Stephen Saladine, the managing director of Macquarie Generation at the time AGL bought both Bayswater and Liddell plants, said the then state-owned corporation had planned for Liddell's closure "in the early [20]20s".
Mr Saladine, who had 40 years experience in the power industry, predicted Liddell would be gradually wound down - probably one unit at a time - as costly maintenance of the aging boilers was curtailed.
Liddell had been run with a plan to overhaul its units over four years, compared with about six years at Bayswater.
Malcolm Turnbull has urged AGL to put consumers before shareholders and agree to sell Liddell power station. Photo: Alex Ellinghausen
While Liddell could be extended beyond 2022, it would likely require careful work being done now. Ensuring the equipment - which operates with steam under very high pressure and temperatures - was safe remains critical as "any catastrophic failure would be a risk to people", Mr Saladine said.
NSW energy minister Don Harwin declined to comment.
Fairfax Media understands that while Mr Turnbull had contacted Premier Gladys Berejiklian about extending Liddell the federal government had yet to get in touch with Mr Harwin.
Adam Searle, Labor's energy spokesman, described Liddell as "really the Picture of Dorian Gray power station", referring to Oscar Wilde's novel of an Englishman's portrait that ages rather than its subject.
The plant's recent outages were "situation normal at Liddell", Mr Searle said.
Bank baulks
ANZ Bank chief executive Shayne Elliott, meanwhile, said his bank was unlikely to finance any refurbishment of the Liddell power station to extend the plant's life, because it would not meet the bank's environmental standards.
"We would look at our standards. In that particular case, it would be very unlikely that one would meet our standards so we would not finance it," Mr Elliott said on ABC Radio in Hobart.
Mr Elliott said the bank would only finance the coal industry when it met "very, very high environmental standards", which restricted the bank to "ultra clean coal".
ANZ, one of the largest lenders to fossil fuels in the country, toughened its lending standards for the coal industry in late 2015 that ruled out new lending to power plants with high carbon emissions.
With Clancy Yeates
