The life of Australia’s largest coal-fired power station will be extended by at least two years to avoid power outages and blackouts in New South Wales.
Origin Energy has been in talks with the New South Wales government about extending the life of the Eraring power station after a review warned the planned retirement in August 2025 could lead to electricity shortages and price increases. , leaving a 25 per cent gap in New South Wales’ energy needs.
In a statement on Thursday, the state government called the agreement “temporary and specific” in order to guarantee a minimum supply of electricity until the new planned shutdown date.
“A temporary extension to Eraring will allow time to deliver the grid, storage and renewable energy infrastructure projects needed to replace the power station,” he said.
The New South Wales government and Origin have agreed a subscription agreement under which the state will not make any upfront payment to the energy company to operate Eraring.
The Eraring power station (pictured) was due to close in mid-2025, seven years earlier than planned.
Instead, Origin will have to decide by March 31, 2025 and 2026 whether it wants to opt into the subscription agreement for the next financial year and share up to $40 million per year of any profits it makes from the facility.
If the power station runs at a loss, Origin will not be able to claim more than 80 percent of the sum from the state government.
Those claims will be capped at $225 million each year, if the company chooses to participate.
Environmental groups and progressive think tanks have long opposed Eraring being given any lifeline.
“Keeping Eraring open beyond its closing date will make the national task of decarbonizing our energy grid much more difficult,” said Annika Reynolds, climate policy adviser at the Australian Conservation Foundation.
Federal Energy Minister Chris Bowen said in March that delaying Eraring’s withdrawal would not jeopardize Australia’s 2030 emissions reduction target.
Eraring was privatized under the previous Coalition government in a 2013 deal that resulted in Origin receiving $75 million to take over the old asset.
NSW Energy Minister Penny Sharpe stressed today’s decision was a “temporary and targeted arrangement” to ensure reliability, however she said the state was still prioritizing a transition to green energy.
‘New South Wales is stepping up the transition to cheap, clean and reliable renewable energy. But to keep the lights on and prices low, we must ensure new renewable infrastructure and storage capacity is in place before coal-fired generators reach the end of their useful lives,” he said.
‘This temporary and specific agreement will provide financial support only if necessary, and only for as long as necessary, during an orderly exit from coal power.
“This is a proactive and sensible step to ensure a plan is in place, if necessary, to prevent power outages and rising energy prices.”
The government has emphasized Thursday’s announcement would protect NSW taxpayers.
Opened in 1984, the Eraring operation (pictured) is Australia’s largest coal-fired power station.
‘This agreement strikes the right balance. It means the transition to clean energy can continue without exposing families and businesses to extreme bill shocks during a serious cost of living crisis,” said NSW Treasurer Daniel Mookhey.
‘Taxpayers are well protected. We won’t hand a $3 billion check to Origin like some said we would. Instead, this agreement incentivizes Origin to use the subscription only if there is a sudden change in market conditions.
“If Eraring had remained in public ownership, a deal like this would not have been necessary.”
