Eraring extension sparks renewables investment concerns

Origin Energy’s decision to extend the operation of Australia’s largest coal-fired power station until 2029 has come under fire with the Institute for Energy Economics and Financial Analysis warning it creates uncertainty that could threaten new renewables investment.

January 21, 2026 David Carroll

Image: Origin Energy

Origin Energy has confirmed it will extend the operation of all four units of its ageing coal-fired Eraring Power Station to April 2029, saying the decision will support energy supply in New South Wales (NSW) during the energy transition.

The 2,880 MW coal-fired power plant, near Newcastle on the NSW Central Coast, had been scheduled to shut down in 2025 before Origin struck a $450 million (USD 303 million) risk-sharing deal with the state government to keep the plant operating until August 2027. Under that agreement, the state government would cover losses of up to $225 million a year.

Origin has now pushed the closure date out to April 2029 after “assessing a range of factors, including the needs of our customers, market conditions and the important role the plant plays in the NSW energy system.”

Johanna Bowyer, Australian electricity lead analyst at the United States-based Institute for Energy Economics and Financial Analysis (IEEFA), said the new timeline erodes investor confidence and threatens renewable energy targets.

“Eraring was already extended once, extending it for another two years undermines certainty right when investors in new replacement generation need clarity,” she said, noting that “continual coal life extensions create uncertainty that scares off new renewables investment.”

Bowyer said NSW needs to move faster on renewables and transmission to make sure coal is replaced in a timely manner.

“Clear, credible coal closure dates are essential if we want new clean energy built on time,” she said.

Her thoughts were echoed by Clean Energy Council Chief Executive Jackie Trad who said while not unexpected, the Eraring extension underscores the urgent need to accelerate private investment in renewable energy, storage and transmission across NSW and Australia.

“An orderly transition matters, but the reality is that old coal power stations are increasingly unreliable and expensive, and that volatility flows straight through to consumers,” she said.

“The solution is not to lean longer on ageing coal plants a day longer than necessary. The solution is to continue accelerating renewable energy. Every renewable energy, storage and transmission project that reaches delivery reduces our reliance on ageing coal and moves the system closer to being cleaner, more affordable and more reliable.”

Origin Chief Executive Officer Frank Calabria said the decision to extend Eraring’s operations responds to system security risks highlighted by the Australian Energy Market Operator (AEMO) in its recently released Transition Plan for System Security and enables the plant to continue to provide reliable power to the NSW grid. Eraring supplies about 20% of the state’s power.

“Good progress is being made on the delivery of new energy infrastructure including major transmission works and projects like our large-scale battery at Eraring, but it has become clear Eraring Power Station will need to run for longer to support secure and stable power supply,” he said.

“Our decision to keep Eraring operating until April 2029 provides more time for renewables, storage and transmission projects to be delivered, and reflects uncertainty regarding the reliability of Australia’s ageing coal and gas fleet.”

Origin said the extension of Eraring operations is not expected to affect the company’s 2030 emissions reduction targets and long-term ambition to achieve net zero emissions by 2050.

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