For decades, coal and gas-fired power stations have been the workhorses of Australia's electricity grid. Designed to run continuously, these power generators provided stable and predictable energy, underpined by coal (ie baseload) and firmed by gas peakers.
But as variable renewable energy (VRE) sources like solar and wind rapidly expand, a question now looms:
👉 Is traditional baseload generation still economically viable?
The Rise of Renewables
Australia's energy mix has changed dramatically over the past decade.
In 2023:
- Renewables generated 35% of Australia's electricity
- Solar: 16%
- Wind: 12%
- Wind and solar together produced over 95,000 GWh
They are no longer fringe players — and their impact is structural.
Curtailment is not just a problem for Variable Renewable Energy
Curtailment is often associated with renewables. But now, coal generators are increasingly curtailed too — not because of outages, but because they’re simply not needed.
➡️ During sunny days, rooftop solar slashes grid demand.
➡️ Coal must ramp down — or sit idle.
This disrupts their economics fundamentally.
The New Economics of Baseload
Coal plants were designed to run 24/7. But today, they face mounting challenges:
1. Reduced dispatch hours = less revenue
2. Negative and low prices = shrinking margins
3. Increased cycling = higher wear and inefficiency
These aren’t future risks — they’re real now. Eraring, Australia’s largest coal plant, is already set to close early.
Source: Figure 14, Page 16, Quarterly Energy Dynamics Q4 2023
Do we still need Baseload?
Some still argue for the need for baseload.
But in modern grids, reliability comes from flexibility, not inflexibility.
✅ Batteries
✅ Demand Response
✅ Flexible Gas
✅ Smart Grid Controls
These firm up renewables and keep the lights on — better than inflexible coal plants.
What it means for the future
The implications are profound:
- 🏗️ Investment must shift to firming and flexibility
- 📊 System planning must prioritise resilience
- 🔧 Market design must reward availability when it matters
Australia’s transition is not theoretical — it’s here.
Conclusion
Coal and other forms of baseload generation are becoming uneconomic — not because they’ve failed technically, but because they don’t fit the new grid model.
As renewables rise, so must our understanding of what reliability actually means.
💬 Got thoughts or want to explore the data further? Let’s connect.