I was told this by an engineer who worked on the design, construction and commissioning of the last 2 major coal-fired power stations built in the Hunter Valley. He gave me a very detailed description of how coal-fired generation works, which makes some your points questionable at best, points 2 and 3 particularly.

Remember the "generators" are really alternators, ie they generate AC current. Accordingly, each unit must be synchronised to the grid so the frequency and phase match. It takes time to spin a generator up to the correct speed and phase before it can be connected to the grid. I would have to check this, but the figure of 90 minutes comes to mind.

The power stations quoted to me as examples are modular in design, they each contain generator modules of 660MW each. These are either online or offline at any time, ie they contribute 660MW or zip to the grid. There is no in-between,

I take your point about capacity matching, but this is not a short-term thing. They can't vary generation capacity by simply slowing down a generator by venting steam or feeding less coal. They have to put modules on- or off-line, 660 megawatts at a time. The ideal situation, from the power company's POV, is to have excess electricity generated at all times to cover short-term spikes.

This is why we have off-peak tariffs. They are an incentive for consumers to use some of the excess output that would otherwise be dumped to ground. Yes it does happen, the equipment is designed to do this without damage. If electricity generators could reduce their output overnight and sell it at full price, they would, because it would be more profitable to do so. This fact alone is compelling evidence that my engineer friend is right.