Western Australia's government has called time on its involvement in coal power, declaring the state will exit the market before 2030 and plough billions of dollars into renewable energy and storage.

In a landmark announcement this afternoon, Premier Mark McGowan and Energy Minister Bill Johnston revealed state-owned power provider Synergy would shut its remaining coal-fired plants by 2029.

Mr McGowan said the change was needed because the proliferation of renewable energy sources meant coal power was becoming more expensive.

He said without a shift, household power bills could rise by around $1,200 a year by 2030.

About 1,200 staff from Collie and the surrounding areas will be affected by the decision, although the government, industry and unions are aiming to retrain or re-employ workers as part of a "just transition" program.

Synergy currently owns and runs two coal power stations, the 854MW Muja plant and the 340MW Collie asset, both of which are near Collie about 200km south of Perth.

The government had already announced its planned closure of dates of October this year and 2024 for some older units at Muja.

Renewable projects to ramp up

Under the decision announced on Tuesday, Collie will be closed by October 2027 while the remaining units at Muja will be shuttered just two years later, by October 2029.

The exits will leave one coal-fired power plant operating in WA – the privately-owned Bluewaters generator which is also near Collie.

As part of the shake-up, the government will spend $3.5 billion over 10 years building renewable energy capacity to replace the lost generation.

This will feature about 800MW of new wind capacity along with more than 2000MWh of storage, including fast-start lithium-ion batteries.

Crucially, the government will also push for the construction of so-called deep storage such as pumped hydro capacity, which can provide power for days at a time if needed.

It's believed the government is eyeing the Collie region, with its steep topography and mine voids, as a lead candidate for pumped hydro investment.

Mr McGowan said gas-fired power stations would continue to provide extra power, especially because of WA's gas reservation policy.

He said the government did not plan to build any new gas plants after 2030, but left the door open until then.

The Premier also committed to capping power price increases with inflation until at least 2025.

Focus on jobs

Mr McGowan was in Collie to make the announcement on Tuesday and tried to allay concerns of locals.

He highlighted $660 million the government was spending in the town, including $300 million to decommission the plants and $250 million for "industry attraction and transition programs".

"We want to make sure that Collie remains prosperous and successful, that people going to school in Collie can continue to have a good job here in this community," Mr McGowan said.

CFMEU state secretary Greg Busson said his main priority was to secure ongoing employment for those affected.

"We see globally now people are trying to get out of coal and power generation, but the main concern is that everyone in town that's got a job can continue to live the lifestyle they do with good-paying jobs with good conditions," he said.

"At this stage, we haven't gotten a like for like replacement for an industry that will replace those jobs, with the number of jobs and the terms and conditions that they contain.

But Mr Busson said he was happy how the transition was proceeding, particularly the marketing of Collie as a tourist town.

"Compared to what has happened in other states, I think we're far in advance of other states, how they've handled it," he said.

"The consultation with the unions and the employers in town has been great. We can always do better. But I think we're far superior to what's happened on the east coast."

Rooftop solar to the fore

Mr Johnston said the shift away from coal in WA was being fast-tracked by the rapid adoption of rooftop solar, which was hollowing out the revenue flowing to thermal generators.

He said the closure of Synergy's remaining coal plants would help with the transition towards green energy while simultaneously improving the utility's bottom line.

According to the Minister, coal power stations are ill-equipped to deal with the competition from renewable energy because they are designed to run in a steady – or baseload – state all the time.

However, he said renewable energy by its nature was variable in its output and this was forcing the coal-fired plants to cycle up and down to accommodate production from wind and solar generators.

As a result, he said the coal plants were earning less revenue at the same time as they were racking up ever-larger maintenance bills, killing their business model.

Widespread shift away from coal

State governments and energy companies across the country are reassessing the economic lives of their coal-fired plants.

Origin Energy is planning to shut Australia's largest coal-fired power plant in New South Wales seven years early in 2025.

In August 2019, the McGowan Government announced the staged retirement of Muja over two years from October 2022.

In December 2020, it released a 15-year plan to shift Collie away from its dependence on coal and coal-fired energy production and develop other industries.

The Premier said his government had learned from 'fraught' experiences on the east coast of Australia, and would require power station operators to provide at least three years' notice of any future closures.

The WA Liberals took an ambitious plan to the 2021 state election under former leader Zak Kirkup, unsuccessfully vowing to close all publicly-owned power stations by 2025.

Local member Jodie Hanns, who appeared at the announcement alongside Mr McGowan and Mr Johnston, said it was a "tough day" for the community, but she was confident the region had a "sustainable and vibrant" future.