Up to 1000 people will lose their jobs after operators of the Hazelwood power plant in the Latrobe Valley told staff it would close on March 31.
Staff were told on Thursday morning they will receive counselling, career advice and offers of financial help from the state and federal governments.
The plant, in Victoria’s Latrobe Valley, employs about 750 people, with 450 direct employees and 300 contractors.
Energy and Resources Minister Josh Frydenberg announced a package to help staff affected by the closure.
Mr Frydenberg said the government did not want a repeat of the South Australian energy blackout that triggered a heated political debate about renewable energy.
Victorian Premier Daniel Andrews announced the Latrobe Valley Authority – a 20-person task force to be operated from the area and help with the transition of workers.
He also announced a $22 million package to go towards training and financial assistance for the affected.
The news will hit the Latrobe Valley hard, where unemployment is already very high.
About 200 people work at Loy Yang B, which is Victoria’s newest brown coal fired plant and provides about 17 per cent of the state’s energy needs.
French energy company ENGIE has been threatening to close the plant for months.
ENGIE chief executive in Australia, Alex Keisser, said the 1600-megawatt power station was no longer economically viable.
“ENGIE in Australia would need to invest many hundreds of millions of dollars to ensure viable and, most importantly, continued safe operation,” Mr Keisser said in a statement.
“Given current and forecast market conditions, that level of investment cannot be justified.”
Mr Keisser called it a difficult decision and a difficult moment for all the employees.
“I want to thank them all, the past and present employees of Hazelwood, who worked diligently over last 50 years to produce low coast and reliable electricity for Victoria,” he said.
“We have done different studies to see if we could transform Hazelwood to a biomass plant. We’ve looked also to see if we could repower it with gas.
“Unfortunately the power price today in Australia does not make any of these options viable.”