NSW to enter talks to extend life of Eraring, Australia’s largest coal-fired power station

NSW to enter talks to extend life of Eraring, Australia’s largest coal-fired power station | Energy | The Guardian

The Minns government will “engage” with the owner of Australia’s biggest coal-fired power station for a “temporary” extension of its operating life, prioritising short-term energy security over emissions reductions.

A final cost and length of extending operations of the 2,880-megawatt Eraring power plant near Newcastle would hinge on negotiations with owner Origin Energy, the government said on Tuesday.

Origin declared in February 2022 that it planned to close Eraring in August 2025 and has said it needs to spend as much as $250m a year on equipment and repairs alone to keep it operating. The company bought it for $50m from the Coalition government in 2013.

Extending the plant was one of the recommendations of an independent “check-up” of the state’s energy policies conducted by analyst Cameron O’Reilly and a small panel.

“NSW has no time to waste as coal-fired power retires and needs to be replaced by renewable generation, transmission and storage,” Penny Sharpe, energy minister, said.

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The team found New South Wales wasn’t likely to have enough renewable energy generation and storage in place in time to counter the exit of fossil-fuelled power stations.

O’Reilly, now with Marsden Jacob Associate, did not make an assessment of how many of Eraring’s four units should operate or for how long.

One of the 54 recommendations will require Origin to demonstrate any claims about the extension of Eraring to an energy security target monitor “and provide all information required to verify those claims.

The government accepted 50 of the recommendations, with 44 approved in full and three in part. Three others were already underway, the government said.

AGL Energy closed the remaining three units of its 1680MW Liddell plant in the Hunter Valley in April and all other coal-burning generators may be closed or mothballed by the mid-2030s.
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The previous Coalition government considered an offer from Origin for Eraring. Then energy minister Matt Kean said on Monday the full cost of keeping two of the plant’s four units going for two years was a net $3bn, a figure Sharpe and others rejected.

Opponents of the extension such as energy analyst Tim Buckley have called on the government to use the funds it would pay Origin instead to quicken the rollout of rooftop solar and batteries for households and businesses to limit the risk of blackouts.

The Australian Energy Market Operator said last week that this summer would likely see an elevated risk of power outages, particularly in Victoria and South Australia. It also modelled an extension of Eraring’s operations and said it would reduce blackout risks later in the decade.

The energy security monitor would also “actively scrutinise” the plans of the state’s other coal-fired power stations as they approach retirement from the grid “to ensure ongoing reliability at the lowest cost”. These plants are Vales Point, Mount Piper and Bayswater.

The government’s engagement with origin over Eraring would run in parallel with the pursuit of “all alternative solutions to deliver the renewable generation, transmission and storage solutions that NSW needs”.