The Baseline: What Are We Replacing?
To do a fair like-for-like replacement, we need to match the current output. The Loy Yang complex (A and B combined) in Victoria's Latrobe Valley has a generation capacity of roughly 3,280 Megawatts (3.3 Gigawatts). It currently supplies about 30% of Victoria's power requirements.
We aren't just building a shed. We are building a massive, modern High-Efficiency Low-Emissions (HELE) ultra-supercritical coal plant, while simultaneously dealing with the astronomical cleanup costs of the old plant and its adjacent open-cut brown coal mine.
The Estimated Bill
Site Demolition & Rehab
~$1.5B - $2.5B
Clearing the old asbestos-riddled plant, removing toxic waste, and safely rehabilitating the massive open-cut mine.
Read the breakdown →New Build (3.3 GW)
$18B - $24B
Capital cost to engineer, procure, and construct a modern HELE coal plant matching Loy Yang's output.
Read the breakdown →Yearly Maintenance & Ops
~$165M / year
Ongoing operational costs, staff, routine maintenance, waste ash disposal, and fuel (mining) costs.
Read the breakdown →Phase 1: Site Clearing & Rehabilitation
Before you can build the new plant, you have to deal with the old one. Loy Yang isn't just a building; it's a massive industrial complex paired with one of the largest open-cut mines in the Southern Hemisphere.
- Demolition & Waste Removal: Pulling down the massive cooling towers, boilers, and managing hazardous materials like asbestos and decades of toxic coal ash.
- Mine Rehabilitation: The Victorian government requires coal mines to be safely rehabilitated (often by filling them with water to create artificial lakes to prevent coal seam fires and wall collapses). For context, rehabilitating the smaller Hazelwood mine is estimated to cost well over $1 Billion. Loy Yang's footprint is significantly larger.
Phase 2: Building the New Plant (Capital Expenditure)
A modern High-Efficiency Low-Emissions (HELE) black or brown coal plant is an incredibly expensive piece of infrastructure. According to standard industry metrics (like the CSIRO GenCost report), new coal generation in Australia is among the most expensive forms of new-build energy per megawatt.
- Cost per Kilowatt: Current estimates for new HELE coal plants in Western nations range from $5,500 to over $8,000 per kW of capacity.
- The Math: 3.3 Gigawatts = 3,300,000 Kilowatts. At a conservative middle-ground of $6,500 per kW, the capital cost comes to $21.45 Billion.
- Construction Time: Typically 7 to 10 years from approval to commissioning.
Phase 3: Yearly Operations & Maintenance (O&M)
Once built, the plant needs to be fed, staffed, and maintained. Coal plants have high fixed operating costs due to the massive mechanical engineering involved (boilers, turbines, scrubbers, bucket-wheel excavators for the mine).
- Fixed & Variable O&M: Industry rule-of-thumb puts operations and maintenance for large-scale coal at roughly $50 to $60 per kW per year.
- Fuel Costs: While brown coal is "cheap" because it's dug up right next door, running the heavy machinery to mine millions of tonnes a year still costs tens of millions of dollars annually.
- Ash Disposal: Managing the byproducts (fly ash and bottom ash) requires constant logistical management.
The One Nation Policy Factor
Pauline Hanson's One Nation party has a stated policy to withdraw from international climate agreements and construct new low-emission, High-Efficiency (HELE) coal-fired power stations to secure baseload power.
The Reality of Financing
The major hurdle for this policy isn't just environmental; it's purely financial. No major Australian or international bank, superannuation fund, or private equity firm is currently willing to finance a new coal plant in Australia. They view it as a "stranded asset" risk due to the 40-year lifespan required to pay off the massive capital costs.
Who Pays the Bill?
Because private money won't touch it, executing the One Nation policy to build a $20+ Billion replacement for Loy Yang would require massive, direct taxpayer funding or government indemnities. That equates to roughly $1,000 to $1,500 taken from every single taxpayer in Australia just for the capital build of this one power station.
Sources & Supporting Documents
- CSIRO GenCost Report: Annual economic evaluation of electricity generation costs in Australia, highlighting the capital costs of new-build HELE coal versus renewable alternatives. Read the GenCost Report
- AEMO Integrated System Plan (ISP): The Australian Energy Market Operator's 20-year roadmap for the eastern seaboard's power system and transition planning. View AEMO ISP
- Mine Land Rehabilitation Authority (Victoria): Official information on the scale, regulations, and projected costs of rehabilitating Latrobe Valley's coal mines. Visit MLRA Victoria