Eraring early closure sparks calls for co-ordinated approach

Origin Energy said on Thursday the Eraring power station at Lake Macquarie in the Hunter region of New South Wales (NSW) will be closed in August 2025, seven years earlier than previously scheduled, as an influx of wind and solar power has made the plant uneconomic to run.

“The reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries,” Origin Energy chief executive Frank Calabria said in a statement.

The company plans to install a big battery of up to 700MW with a dispatch duration of four hours at the Eraring power station site.

Origin said the battery plans are “well advanced” but the timing is not yet certain although it aims to have it mostly built before the 2,880MW plant shuts.

“We’ve been clear on our strategy and ambition to lead the energy transition,” Calabria said.

Origin’s announcement comes on the back of that from fellow energy retailer AGL last week that it would bring forward the planned closure of its two biggest coal-fired power plants – including the 2,640MW Bayswater coal-fired power plant in the Hunter to “no later than” 2033 and for its 2.210MW Loy Yang A power station in Victoria to 2045. AGL’s coal-fired Liddell power plant, also in the Hunter, remains on track to close in April 2023.

Clean Energy Council (CEC) chief executive Kane Thornton said the latest announcement highlights the need for policy and regulatory reform to accelerate the deployment of renewable energy and storage.

“What we’re seeing unfold is precisely what the Australian Energy Market Operator (AEMO) anticipated in its draft 2022 Integrated System Plan: a rapid acceleration in coal-fired power station retirements,” he said.

“While the renewable energy industry is ready to deliver replacement supply, these accelerated coal retirements need to be coordinated to ensure our electricity system remains stable through this rapid transition.”

Eraring is the biggest of Australia’s 16 remaining coal-fired power plants. Seven of those are already scheduled to close by 2035 while the last is planned to shut by 2051.

Thornton said Australia’s ageing coal assets represent a key vulnerability in the nation’s power system, and it is critical to bring forward the necessary investment in renewable generation and storage to replace them.

“Investors are willing to develop the projects that put Australia on the pathway to a future powered with clean energy, but what’s missing is a strong federal policy to underpin that new investment,” he said.

Federal Energy Minister Angus Taylor described Origin’s decision as “bitterly disappointing”, warning the “early and sudden closure” of the Eraring power plant, which provides about 20% of NSW generation output, would leave a considerable gap in reliable generation in the National Electricity Market (NEM).

AEMO chief executive Daniel Westerman however said there is enough supply coming into the electricity market to compensate for the exit of Eraring.

“Planned additional transmission capacity – including the announced battery – will give the state access to enough electricity generation to meet the Energy Security Target at the time Eraring closes,” he said.

NSW Energy Minister Matt Kean is also confident sufficient capacity will be available to adequately replace the Eraring plant, saying the state government would move to accelerate transmission upgrades and the construction of new electricity generation.

Kean said the government will work with industry partners to install the 700MW/1,400MWh “Waratah Super Battery” on the state’s Central Coast by 2025.

“We are also establishing a Transmission Acceleration Facility to accelerate the delivery of priority transmission projects and Renewable Energy Zones, which are modern day power stations,” he said.

“In addition, we are providing a $47.5 million to accelerate the development of pumped hydro in the state.”

Origin acknowledged that bringing forward the closure date for the Eraring power plant presented a challenge for the sector but said it had carefully weighed Eraring’s future for some time.

“This is a market in rapid transition,” Calabria said.

“The cost of renewable energy and battery storage is increasingly competitive, and the penetration of renewables is growing

“Origin’s proposed exit from coal-fired generation reflects the continuing, rapid transition of the NEM as we move to cleaner sources of energy,” Calabria said.

As part of its replacement plan for Eraring, Origin will continue to progress its plans for a battery of up to 700MW to be located on the site and will also seek to bring online additional renewable and storage capacity, including a potential expansion of the Shoalhaven pumped hydro scheme.

Origin on Thursday reported an 18% rise in underlying profit to $268 million for the half-year to December, boosted by record-high revenue from its stake in the Australia Pacific LNG plant, while earnings from its energy markets business fell due to lower power tariffs to customers.