NSW government extends life of Australia’s biggest coal-fired power station by two years to 2027
Australia’s biggest coal-fired power station will remain operational for another two years after the New South Wales government signed a deal with its owner, Origin Energy, in a bid to limit the risk of electricity shortages until more renewables are built.The agreement, announced on Thursday, involves NSW taxpayers underwriting the 2.88-gigawatt Eraring plant near Lake Macquarie to keep generating power beyond the scheduled closure date of August 2025 Origin had set two years ago.“The people of NSW now have certainty that the NSW government has a plan to ensure we have reliable energy while we transition the workforce and the economy to net zero,” premier Chris Minns said.“The best way to undermine the renewable energy transition is to have the lights go out in 2025. I’m not letting that happen.”The government said it would not make upfront payments to Origin Energy to operate Eraring. An underwriting arrangement would instead operate, capping any losses to operate the plant at 80% or as much as $225m a year.Origin confirmed the agreement in a statement to the ASX this morning. Should Eraring turn a profit during the two years, it would pay the government 20% or no more than $40m a year, it said.Talks between Origin and the Minns Labor government began last year, spurred in part by an independent report that argued for a “temporary” extension of Eraring to “provide NSW with a buffer” to manage the risks if insufficient renewable energy and storage came online in time. A deal had been anticipated.The Australian Energy Market Operator also chimed in earlier this week, warning the slower than expected construction of transmission lines and additional wind and solar farms would create a “reliability gap” of more than 1GW for NSW if Eraring’s closure proceeded as planned.“This is a proactive and sensible step to ensure a plan is in place, if needed, to avoid electricity outages and rising power prices,” energy minister Penny Sharpe said.“The NSW Labor government remains entirely committed to the transition to renewable energy and our emissions reduction targets. A net zero future holds immense opportunities for our state’s economy and our environment.”Analysts such as Tim Buckley, head of Climate Energy Finance, had estimated extending Eraring could cost NSW at least $150m a year and delay efforts to cut greenhouse gas emissions. The previous Perrottet Coalition government calculated the cost at as much as $1.6bn to keep Eraring running for 18 months based on sky-high coal prices in early 2023.Stephanie Bashir, principal at Nexa Advisory, said the money would have been better spent accelerating approvals of wind and solar farms while helping more households to put solar panels on their roofs.“If the NSW government was serious about addressing the cost of your energy bill, they would be doing everything in their power to speed up the rollout of large and small-scale renewable energy,” Bashir said before Thursday’s announcement.“Origin is a publicly listed company which should be propped up by shareholders – not taxpayers.”She said the move would “set up a costly and dangerous precedent” for the other three remaining coal plants, Vales Point, Bayswater and Mt Piper.Environmental groups who have been campaigning against Eraring will also be disappointed by the extension.The Hunter Community Environment Centre, for instance, noted in a 2019 report that Eraring’s cooling towers released the daily equivalent of a one-in-40 year flood event into Lake Macquarie. The lake is the largest coastal estuary in eastern Australia, covering about 110km2.Eraring was also source of many heavy metals and had contributed to a coal ash dam of more than 35mt. In 2019, a local recreation area had to be abandoned because of dam safety concerns.Tony Farrell, the deputy chief executive of Lake Macquarie city council, said Eraring and associated coalmines were a very significant employer in the region, supporting many businesses directly and indirectly.An extension of Eraring would not obviate the need to broaden the economic base of the city, Farrell said.“We’ve got to start preparing meaningful plans” for the region beyond coal, he said.
Deal struck with Origin Energy, owner of 2.88-gigawatt Eraring plant near Lake Macquarie, to limit risk of electricity shortages as renewables come onlineFollow our Australia news live blog for latest updatesGet our morning and afternoon news emails, free app or daily news podcastAustralia’s biggest coal-fired power station will remain operational for another two years after the New South Wales government signed a deal with its owner, Origin Energy, in a bid to limit the risk of electricity shortages until more renewables are built.The agreement, announced on Thursday, involves NSW taxpayers underwriting the 2.88-gigawatt Eraring plant near Lake Macquarie to keep generating power beyond the scheduled closure date of August 2025 Origin had set two years ago.Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup Continue reading...
Australia’s biggest coal-fired power station will remain operational for another two years after the New South Wales government signed a deal with its owner, Origin Energy, in a bid to limit the risk of electricity shortages until more renewables are built.
The agreement, announced on Thursday, involves NSW taxpayers underwriting the 2.88-gigawatt Eraring plant near Lake Macquarie to keep generating power beyond the scheduled closure date of August 2025 Origin had set two years ago.
“The people of NSW now have certainty that the NSW government has a plan to ensure we have reliable energy while we transition the workforce and the economy to net zero,” premier Chris Minns said.
“The best way to undermine the renewable energy transition is to have the lights go out in 2025. I’m not letting that happen.”
The government said it would not make upfront payments to Origin Energy to operate Eraring. An underwriting arrangement would instead operate, capping any losses to operate the plant at 80% or as much as $225m a year.
Origin confirmed the agreement in a statement to the ASX this morning. Should Eraring turn a profit during the two years, it would pay the government 20% or no more than $40m a year, it said.
Talks between Origin and the Minns Labor government began last year, spurred in part by an independent report that argued for a “temporary” extension of Eraring to “provide NSW with a buffer” to manage the risks if insufficient renewable energy and storage came online in time. A deal had been anticipated.
The Australian Energy Market Operator also chimed in earlier this week, warning the slower than expected construction of transmission lines and additional wind and solar farms would create a “reliability gap” of more than 1GW for NSW if Eraring’s closure proceeded as planned.
“This is a proactive and sensible step to ensure a plan is in place, if needed, to avoid electricity outages and rising power prices,” energy minister Penny Sharpe said.
“The NSW Labor government remains entirely committed to the transition to renewable energy and our emissions reduction targets. A net zero future holds immense opportunities for our state’s economy and our environment.”
Analysts such as Tim Buckley, head of Climate Energy Finance, had estimated extending Eraring could cost NSW at least $150m a year and delay efforts to cut greenhouse gas emissions. The previous Perrottet Coalition government calculated the cost at as much as $1.6bn to keep Eraring running for 18 months based on sky-high coal prices in early 2023.
Stephanie Bashir, principal at Nexa Advisory, said the money would have been better spent accelerating approvals of wind and solar farms while helping more households to put solar panels on their roofs.
“If the NSW government was serious about addressing the cost of your energy bill, they would be doing everything in their power to speed up the rollout of large and small-scale renewable energy,” Bashir said before Thursday’s announcement.
“Origin is a publicly listed company which should be propped up by shareholders – not taxpayers.”
She said the move would “set up a costly and dangerous precedent” for the other three remaining coal plants, Vales Point, Bayswater and Mt Piper.
Environmental groups who have been campaigning against Eraring will also be disappointed by the extension.
The Hunter Community Environment Centre, for instance, noted in a 2019 report that Eraring’s cooling towers released the daily equivalent of a one-in-40 year flood event into Lake Macquarie. The lake is the largest coastal estuary in eastern Australia, covering about 110km2.
Eraring was also source of many heavy metals and had contributed to a coal ash dam of more than 35mt. In 2019, a local recreation area had to be abandoned because of dam safety concerns.
Tony Farrell, the deputy chief executive of Lake Macquarie city council, said Eraring and associated coalmines were a very significant employer in the region, supporting many businesses directly and indirectly.
An extension of Eraring would not obviate the need to broaden the economic base of the city, Farrell said.
“We’ve got to start preparing meaningful plans” for the region beyond coal, he said.