Impact of a Coal Power Plant Closure on a Multi-region Wholesale Electricity Market

Closure of a base-load power plant, based on either its aging state, or a national greenhouse reduction scheme, or transition to smart grids, may have a significant impact on wholesale electricity markets. This paper presents a Cournot-based multiregion game model based on nonlinear inverse demand functions to formally analyze the impacts of a base-load plant closure on the price level and volatility (increase), and CO₂ emission (decrease). Using the Hazelwood coal plant closure in Victoria, a state of Australia's National Electricity Market (NEM), as a case study, the simulation results indicate around 30% and 49% price and volatility increase in the wholesale market, and 210 million AU$ (+3.5%) higher annual power bills in Victoria for final consumers. However, being the most stable and least volatile region in NEM, Victoria mostly supports its neighboring regions in terms of price and volatility reduction even after the Hazelwood closure.