The WA Government is looking for new consultancies to help with issues at Griffin Coal. 

Opposition MP Steve Thomas says “the government is looking for a solution that probably doesn't exist” by enlisting new consultants in an attempt to salvage a debacle.

Located on the outskirts of Collie, the historical Griffin Coal mine, which has long fueled the state's electricity, is teetering on the edge, casting a dark shadow over the power grid.

Griffin’s Indian owners, including ICICI and Sindhu Trade Links, are owed about $1.4 billion. The government has been propping up the ailing mine with subsidies, shelling out nearly $30 million between May and August alone.

However, an impending shockwave is set to hit energy consumers. 

Last month, the body overseeing WA's major electricity market warned of looming supply shortages unless new capacity is urgently developed. 

These concerns primarily stem from the shaky state of WA's fuel supplies, with coal being the most precarious.

Griffin's long descent into dysfunction has triggered a crisis in WA's domestic coal industry, straining the power system. 

Bluewaters Power Station, Griffin's largest customer, has been running below capacity due to coal shortages, and the state-owned power provider, Synergy, has resorted to importing coal from New South Wales at significant cost.
Bluewaters is taking legal action against Griffin Coal receiver Deloitte.

Additionally, this coal scarcity has collided with a gas market squeeze, leading to skyrocketing gas prices. 

As a result, the Australian Energy Market Operator (AEMO) is racing to avert a full-blown catastrophe by significantly expanding the buffer for system capacity.

This expansion, while necessary, adds to the annual cost of running the grid in WA, where generators receive credits for providing capacity during peak demand. These costs ultimately trickle down to energy consumers through their bills.

Over the past four years, these capacity credits have surged in value, from $78,000 per megawatt to nearly $200,000 per megawatt. 

This spells an additional annual cost of $126 million to electricity customers if the price remains the same in 2025-26 as in 2024-25.

Experts anticipate a need for an extra 648MW of capacity in the system within a couple of years, with costs to amount to around $30 per household annually.

The government attributes these rising costs to the transition to renewable energy, which has led to increased cycling of coal plants to compensate for intermittent green energy output, causing more wear and tear.

While the government insists it will keep electricity affordable for households, it appears that Griffin's problems have exacerbated the situation, making a commercial deal less likely. 

The mine loses about $50 million annually, and Bluewaters' profitability is dwindling.

As WA braces for a potentially challenging summer, anxiety mounts regarding the grid's ability to withstand inevitable shocks. 

AEMO recently sought supplementary capacity, equivalent to a small coal-fired power station, reflecting the increasing costs attributed to the Collie crisis.