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I won't enter any personal debates, but here's how power generation is shifted from one source to another without actually building any new power stations.
This is for a hypothetical grid, but it's broadly similar to the situation in Victoria. Suppose that you have (for simplicity I'm ignoring maintenance outages etc here and keeping it in layman's terms).
Peak demand of 10,000 MW
Maximum load on a mild day of 6,000 MW
Average demand of 5,500 MW
Normal minimum (excluding blackouts due to storms etc) demand of 4,000 MW
Coal-fired generation of 6,000 MW
Hydro generation of 2,000 MW
Gas-fired generation 2,500 MW
On a hot day with peak demand, you have to run basically everything flat out or very close to it. You therefore have no choice as to where the power comes from - all available generation needs to be running and there's nothing to spare.
But at other times you have a lot of choice. Technical factors limit the ability to switch coal plants on and off, but they can certainly be ramped up and down from full load down to (depending on the plant design) 30 - 60% of capacity.
So on a mild day with 4,000 MW overnight and 6,000 MW during the day there are a lot of options:
You could meet the entire load from coal, apart from some hydro or gas online as spinning reserve (in case a unit breaks down suddenly).
Or at the other extreme you could have 2,500 MW of coal-fired plant online, only running at 2,000 MW, and fully use the available gas and hydro.
For hydro it is usually a case of having a limited water supply and choosing the best time to use it which is itself influenced by recent inflows. If it's dry then run it only to meet the peaks (saving water). If there's a flood then run it flat out 24/7. If it's moderately wet then just run it during business hours. Etc. This is how hydro is normally used in a predominantly thermal (fossil fuel or nuclear) system.
But for coal versus gas it is simply a question of economics. If coal is cheaper then you prioritise the use of coal and minimise the use of gas. Reverse that if gas is cheaper.
A complicating factor is that costs are not fixed per unit of output. Eg it costs money to have a coal plant online in the first place, but getting extra output from it is cheap once it's online (you already have staff there, everything is already running etc). So depending on the economics this will change the desirability of using gas versus coal and create a "lumpy" effect. Eg with a carbon tax at a high enough rate it makes sense to keep coal units offline where possible, but once it's running it may still be cheaper to run it flat out and use less gas.
But the overall principle is straightforward. Make coal cost more than gas, and some production will tend to shift from coal to gas, thus cutting the use of coal and increasing the use of gas. That said, it hasn't happened to any major extent with the actual carbon tax we have. There has been a bit of an increase in gas-fired baseload and shoulder period (ie business hours) running, but if you look at it right now then the brown coal plants in Victoria are, with one exception, running at or close to maximum capacity whilst the gas-fired plants are offline doing nothing. So you'd need a considerably higher rate of tax in order to bring about a large scale shift from coal to gas based on the existing power stations.
What about new power station construction? A carbon tax will certainly favour gas over coal. But once built, it still comes down to the day to day running costs. Eg Mortlake power station (Vic) is a brand new gas-fired plant of medium efficiency. It is sitting idle right now whilst the coal-fired plants are running. Meanwhile there are gas-fired units online in SA operating well below capacity with about 22% of the SA load being supplied from Victoria. Enough said.
For a hydro generator it is basically about having a limited supply of fuel (water) and trying to get the best price for it, subject to system constraints.
It's public knowledge that Hydro Tas is pushing the system as hard as possible whilst the carbon tax is in place in order to maximise revenue. That is certainly not something that has ever been denied, indeed it was publicly announced in July 2012 when the tax commenced that this was the strategy being pursued. Needless to say, production will be throttled back as the carbon tax ends.![]()
You didn't mention renewables, for basillio.