By Holly Tregenza, Isobel Roe, and Bridget Murphy 23 May 2024
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- In short: The Eraring coal power station in Lake Macquarie will remain open until August 2027.
- It was previously due to close next year, leading to fears NSW would not have a reliable power supply.
- What’s next? The state government has agreed to pay Origin up to $450 million over two years if the plant runs at a loss.
The Eraring Power Station in Lake Macquarie will remain open for an additional two years beyond its original 2025 closure date in a deal between Origin and the NSW state government.
Under the agreement, the state government would not make up-front payments to Origin, but would cover losses of up to $225 million a year.
The power station will close in August 2027 allowing a “orderly exit from coal-fired power” to “ensure lights stay on for homes”, according to the state government.
Analysis from the Australian Energy Market Operator found without Eraring, the state would face energy reliability issues from 2025.
The coal-fired power station is the largest in the country, supplying a quarter of NSW’s power needs.
Environment Minister Penny Sharpe said that under the deal, Origin would also need to share profits with the state.
The company would have until March each year to decide if they will opt-in to the agreement for the following financial year.
“If Origin opts in and Eraring generates a profit, it must share that profit — up to $40 million a year,” she said.
“This ensures that the transition to renewables can be delivered without exposing the people of New South Wales to blackouts or to price spikes.”
The government previously ruled out a state takeover of the plant.
NSW Treasurer Daniel Mookhey said the government was not “handing over a cheque” to Origin.
“This is a finely calibrated risk sharing arrangement,” he said.
Ms Sharpe said the closure of Eraring would not impact on the state government’s emissions reductions targets for 2030, but admitted they did need more renewable energy in the system to meet those targets.
Federal Energy Minister Chris Bowen said the NSW government had done a “good job” balancing reliable energy supply and the renewable transition.
“This is not a delay – some people expected all four units to be delayed by five years, that hasn’t happened,” he said.
“Two units by two years I think strikes a reasonable balance.”
Greens criticise extension, union welcomes local jobs
Marilyne Crestias, interim CEO at Clean Energy Investor Group, said she hoped the government did not set a precedent for other coal fired power stations.
“Delaying the closure of Eraring not only jeopardises our renewable energy goals but also undermines efforts to combat climate change and secure a sustainable energy future,” she said.
Hunter Community Environment Centre researcher Paul Winn said some local residents were ‘bitterly disappointed’ by the decision.
“The people of Lake Macquarie… have to suffer the pollution of this facility for another two years, the expectation was always that these facilities had a limited life,” he said.
“I think the owners of Eraring, have been running it with the intention that it’s going to close, so obviously the maintenance and so forth has been a poor over the last several years.
“That’s leading to significant increase in pollution coming from the facility, which we’re all going to have to suffer from for another two years, which is not great.”
The NSW Greens have condemned the extension deal.
Greens spokesperson for Energy and Treasury Abigail Boyd said the government was “dragging its feet” on the transition to clean energy.
“We have two paths ahead of us — either we choose to keep pandering to the fossil fuel industry by keeping coal-fired power stations open longer than they need to be, or we urgently invest in publicly-owned renewables,” she said.
Tony Phillips, Origin’s group manager of coal asset operations at Eraring said news of the extension had been welcomed inside the plant.
“I do want to say how proud I am of the people at site,” he said.
“They’ve been going through a number of years of uncertainty now and their performance has been outstanding.”
There have been concerns that the closure of Eraring would also mean job losses at local mines, some of which send all or half of their coal to Eraring.
Mr Phillips said discussions were ongoing with several suppliers, including its major supplier Centennial Coal.
“It is important that we can we can source competitively priced coal, because that helps with affordability for our customers,” he said
The Mining and Energy Union said it was a “good decision” for workers at the power station and the community.
“Our members have continually told me over the years that if that power station comes offline at this point in time that there is a threat that there could be blackouts in New South Wales,” Northern District Mining President Robin Williams told ABC Radio Newcastle.
A component of the extension agreement is that Origin must maintain its current workforce and provide a plan to the state government for the transition of Eraring employees in the future.
The full detail of the agreement will be tabled in NSW parliament in the next sitting week.
Posted 6h ago6 hours ago, updated 3h ago
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