EnergyAustralia has cautioned that its 1,400 megawatt (MW) Mount Piper coal station may face disruptions in coal supply until the end of the year, owing to flooding at its primary supplier, the Springvale coal mine, according The Australian.
This threatens the stability of Australia’s electrical grid as the country braces for a hot, dry summer.
"The multi-mine supply contract executed with the coal supplier this year has diversified supply sources to maintain continuity of supply in the face of this risk. Despite the mitigation, a shortfall in coal deliveries is expected until the end of the year," stated CLP Holdings, EnergyAustralia’s parent company.
CLP also warned of a downside risk to managing the station with existing stockpiles and expected demand.
Series of setbacks
The issue compounds a series of setbacks for EnergyAustralia, which recently reported heavy financial losses and faces charges by the Australian Competition and Consumer Commission (ACCC) for misleading customers.
In August the company revealed a half-year loss exceeding A$100 million, which adds to concerns about its ability to invest in new renewable energy generation as its rivals, Origin Energy and AGL Energy (ASX:AGL), forge ahead.
The curtailed capacity of Mount Piper comes as Australia anticipates increased electricity demand due to likely El Nino weather conditions.
Coal's role diminishing
Coal accounts for around 60% of the country’s electricity generation.
While the role of coal is diminishing, reliance on it for the upcoming summer is inevitable, adding stress to an already burdened grid and potentially affecting EnergyAustralia's earnings.
The firm has announced a A$5 billion investment by 2030 in renewable energy assets to replace coal power.
However, the shortfall in coal could dent its immediate profitability, making a recovery from financial losses more challenging.