I asked AI this: how much would a new coal-fired power station cost, and what impact would it have on electricity bills?
The short answer is:
A new coal-fired power station in Australia would likely cost A$8–15 billion, depending on its size and technology.
It would probably increase, not decrease, average electricity bills compared with building new wind, solar, and battery capacity today. However, it could reduce exposure to gas price spikes if it displaced expensive gas generation.
Here's why.
Construction cost
A modern high-efficiency, low-emissions (HELE) coal plant of around 1,000 MW would likely cost:
Item
Estimate (A$)
Construction
$8–15 billion
Construction period
7–10 years
Expected operating life
40–50 years
The wide range reflects uncertainty because no large coal-fired power station has been built in Australia for decades, so there is no recent local benchmark.
For comparison:
The cancelled expansion of Medupi Power Station ultimately exceeded A$25 billion after delays and cost overruns.
Recent coal projects in Europe and North America have also experienced substantial overruns.
Why is it so expensive?
Coal plants require much more than the boiler itself:
enormous steam turbines
pollution control equipment
cooling systems
ash handling facilities
coal storage and conveyors
high-voltage grid connection
extensive environmental approvals.
Modern emissions standards also require equipment that older Australian coal stations never had.
What would electricity cost?
This is where it gets interesting.
The cost of electricity from a new plant is usually measured by the Levelised Cost of Energy (LCOE).
Approximate ranges today are:
Technology
Cost (A$/MWh)
Existing depreciated coal
40–80
New coal
120–180+
Gas peaking
150–300 (depends on gas price)
Wind + firming
70–120
Solar + batteries
60–110
These figures vary between studies, but most recent analyses conclude that new coal is more expensive than new renewable generation with storage, largely because of its high upfront capital cost and ongoing fuel and maintenance expenses.
Why are old coal stations cheap but new ones aren't?
This often causes confusion.
Australia's existing coal stations:
were built 30–50 years ago,
have largely been paid off,
operate under older environmental standards.
That means today's consumers mostly pay for:
coal,
maintenance,
staff,
repairs.
A new station has to recover billions of dollars of construction costs over its lifetime.
What impact would it have on household bills?
For a typical Australian household spending around A$2,000 per year on electricity:
Scenario 1: Coal replaces expensive gas
Bills might fall slightly during periods when gas prices are very high because coal fuel has historically been cheaper than gas.
Scenario 2: Coal competes with new renewables
Bills would likely be higher than under a system dominated by new wind, solar, and batteries because the new coal plant's capital costs would need to be recovered from electricity consumers (or taxpayers).
Scenario 3: Government subsidises construction
If taxpayers funded part of the construction cost, electricity prices could appear lower, but the cost would be shifted from electricity bills to government budgets funded by taxation.
Other considerations
A coal plant also faces economic challenges because it operates best at a relatively constant output. Australia's electricity demand now has a deep midday dip caused by rooftop solar, making it harder for coal stations to run continuously at high utilisation. If a new coal plant generated fewer megawatt-hours than planned, its fixed costs would be spread over less electricity, increasing the cost per unit produced.
Could private companies build one?
In theory, yes.
In practice, no major electricity company has announced plans to finance a new conventional coal-fired power station in Australia. The main reasons cited are:
the very large upfront capital cost,
long construction times,
uncertainty over future electricity market conditions,
competition from lower-cost renewable generation and storage.
My assessment
If Australia's objective were simply to build the lowest-cost new electricity generation, the evidence available today suggests that a new coal-fired power station is unlikely to be the cheapest option. Existing coal stations remain relatively inexpensive because their construction costs were paid off decades ago, but replicating that infrastructure today would require a very large new investment. Unless there were substantial government support or a major change in technology or fuel costs, that investment would probably place upward pressure on electricity costs compared with building a mix of renewable generation, transmission, and storage.