Will power plant closures affect electricity prices?

The federal government has opened the Contract for Closure programs to submissions of interest from energy plants wanting to be compensated for shutting down in the interest of the environment.

Power plants which generate power to be delivered to electricity suppliers are generally large producers of carbon emissions and the government hopes to reduce the impact of this on the environment by offering compensation to a select number of plants which choose to voluntarily shut down.

Minister for climate change and energy efficiency Greg Comber says: "This program is designed to facilitate investment in new lower-emissions electricity generation capacity by providing certainty to future investors about the timing of closure of existing generators and, in turn, help them to plan ahead with confidence."

Assistance will be provided to the areas in which plants shut down in order to minimise the impact on the community, however many will inevitably speculate as to how this will affect electricity prices in these regions.

The government is targeting the closure of roughly 2,000 megawatts of generation operations, however not every plant will be eligible for the scheme which will keep submissions open until October 21 2011.

Posted by Charlie Moore