Decision to extend life of Australia’s biggest coal-fired power station will have ‘far-reaching consequences’, critics say

decision to extend life of australia’s biggest coal-fired power station will have ‘far-reaching consequences’, critics say

The operation of the 2.88-gigawatt Eraring plant near Lake Macquarie has been extended by two years beyond the scheduled closure date of August 2025 its owner, Origin, had set two years ago. Photograph: Blake Sharp-Wiggins/The Guardian

Environmental groups say they are “deeply disappointed” by the New South Wales government’s decision to extend the life of Australia’s biggest coal-fired power station for at least two more years, saying it would have “far-reaching consequences” for investments in renewable energy. .

The agreement, announced with Origin Energy on Thursday, involves NSW taxpayers potentially underwriting the 2.88-gigawatt Eraring plant to keep generating power beyond the scheduled closure date of August 2025 Origin set two years ago.

Origin agreed to keep the 40-year power station open to at least 19 August 2027 with an option to keep it running until April 2029 without additional compensation, it told the ASX this morning.

“The people of NSW now have certainty that the NSW government has a plan to ensure we have reliable energy while we transition the workforce and the economy to net zero,” said the premier, Chris Minns.

“The best way to undermine the renewable energy transition is to have the lights go out in 2025. I’m not letting that happen.”

The government said it would not make upfront payments to Origin to operate Eraring. An underwriting arrangement – that Origin will need to opt into – would instead compensate any losses up to $225m a year for those two years.

Similarly, should Eraring turn a profit, it would pay the government 20% or no more than $40m a year.

Origin will have to supply at least 6 terawatt hours of electricity each year, or the typical output of two of its four units. There will be no penalty if it misses the goal.

It’s also unclear how much extra the government might be on the hook for if significant maintenance is needed. If such costs exceeded $50m and the state “chooses to reinstate” the unit needing repairs, it will have to pick up any cost beyond $40m.

Talks between Origin and the Minns Labor government began last year, spurred in part by an independent report that argued for a “temporary” extension of Eraring to “provide NSW with a buffer” to manage the risks should insufficient renewable energy and storage came online in time. Today’s deal had been anticipated.

The Australian Energy Market Operator also chimed in this week, warning the slower than expected construction of transmission lines and additional wind and solar farms would create a “reliability gap” of more than 1GW for NSW if Eraring’s closure proceeded as planned.

“This is a proactive and sensible step to ensure a plan is in place, if needed, to avoid electricity outages and rising power prices,” said the energy minister, Penny Sharpe.

“The NSW Labor government remains entirely committed to the transition to renewable energy and our emissions reduction targets. A net zero future holds immense opportunities for our state’s economy and our environment.”

Analysts including Tim Buckley, the head of Climate Energy Finance, said the extension was “the devastating consequence of a decade of government planning failure”.

“This is essentially Coalkeeper 2.0 – yet another massive coal subsidy funded by electricity users in NSW,” Buckley said.

“Keeping this coal plant open jeopardises our emission reduction targets and imposes unnecessary costs on energy consumers,” Stephanie Bashir, a principal at Nexa Advisory, said.

“Rather than spending $450 million on extending the life of an old, unreliable coal-fired power station, the NSW government should be focusing on untapped practical solutions and can quickly help address forecasted reliability gaps.”

Her group said move was a band aid solution that had “far-reaching implications for investor sentiment, renewable energy targets, and the energy transition overall”.

She said the move would “set up a costly and dangerous precedent” for the other three remaining coal plants, Vales Point, Bayswater and Mount Piper.

Christiaan Zuur, a policy director at the Clean Energy Council Policy, said it would be vital that Eraring’s extension is coupled with measures to integrate new renewable generation and storage into the NSW grid.

“Renewables firmed by storage are the only option available to us to ensure that blackouts and energy price hikes are avoided.”

The Hunter Community Environment Centre, for instance, noted in a 2019 report that Eraring’s cooling systems the daily equivalent of a one-in-40 year flood event into Lake Macquarie. The lake is the largest coastal estuary in eastern Australia, covering about 110 sq km.

Eraring was also source of many heavy metals and had contributed to a coal ash dam of more than 35mt. In 2019 a local recreation area had to be abandoned because of dam safety concerns.

Tony Farrell, the deputy chief executive of Lake Macquarie city council, said Eraring and associated coalmines were a significant employer in the region, supporting many businesses directly and indirectly.

An extension of Eraring would not obviate the need to broaden the economic base of the city, Farrell said.

“We’ve got to start preparing meaningful plans” for the region beyond coal, he said.

Origin’s share price was down about 0.5% in morning trade, with rival AGL’s down 0.3%. That compared with the overall market falling about 1%.

OTHER NEWS

39 minutes ago

Willie Nelson's team gives new health update after canceling his upcoming concert appearances

41 minutes ago

Supreme Court 'Created A Hash' With Gun Control Ruling: Attorney

41 minutes ago

Trump says he suggested setting up a migrant fighting league to UFC’s Dana White

41 minutes ago

Glasgow Warriors player ratings: ‘Sheer perfection’ from outstanding back-row duo as Scots shock Bulls

41 minutes ago

Trump makes a WILD claim about Biden ahead of their CNN debate

41 minutes ago

Israeli strikes kill at least 42 in Gaza City, Hamas-run media office says

41 minutes ago

Video: Disgust as footage emerges of a wounded Palestinian man strapped to hood of an IDF jeep as Middle East conflict continues to rage

44 minutes ago

Inside Out 2 hits $US500m at worldwide box office

48 minutes ago

Diamondbacks catcher Gabriel Moreno on 10-day injured list with sprained left thumb

48 minutes ago

Kevin De Bruyne stars as Belgium beat Romania - but Romelu Lukaku goal curse continues

48 minutes ago

Could big tech eventually face its USSR moment and collapse completely?

48 minutes ago

Taylor Swift's huge net worth after sold-out Era's Tour as she announces end date

48 minutes ago

Max Scherzer set to make season debut Sunday for Rangers against Royals

48 minutes ago

Left-hander Cristopher Sánchez, Phillies agree to four-year deal for 2025-28

48 minutes ago

AFC North Depth Chart Rankings: Off-Ball Linebackers

48 minutes ago

Gray pitches 2-hit ball over 5 innings and Langford hits grand slam to lift Rangers over Royals 6-0

48 minutes ago

MLB Roundup: Thorpe gets first major league win to lead White Sox over Tigers

48 minutes ago

Vandals spray paints ‘F–k Elon’ on 34 new Tesla Cybertrucks in Florida

51 minutes ago

Mets RHP Kodai Senga to throw batting practice on Sunday in Florida

51 minutes ago

Jared Jones strikes out 8, Oneil Cruz hits the ball into the Allegheny as Pirates edge Rays 4-3

53 minutes ago

SAG-AFTRA Names Recipients Of George Heller Memorial Award Gold Cards

54 minutes ago

Free-agent focus for the Edmonton Oilers

54 minutes ago

Stoinis delivers bizarre send-off after unwanted stat

54 minutes ago

Soccer-Belgian De Bruyne not ready to talk retirement after Euros masterclass

54 minutes ago

Iranian rapper Tomaj Salehi spared death penalty, faces retrial amid international outcry

54 minutes ago

Egypt blames Hajj deaths on 'unregistered' Mecca arrivals

54 minutes ago

Hill adds 100m backstroke silver to 50m gold at European Championships

54 minutes ago

Analysis of resigning MPs reveals upcoming demographic shift in parliament

54 minutes ago

What matters to Welsh voters?

54 minutes ago

Nelson’s HMS Victory gives scientists vital DNA for battle against deathwatch beetle

54 minutes ago

Everton make offer to sign "incredible" ace who's the perfect Gueye upgrade

54 minutes ago

15 heatwave-proof dresses to suit all shapes and sizes

54 minutes ago

Travelers Championship: Scottie Scheffler and Xander Schauffele blitz TPC River Highlands to set up a Sunday shootout with leader Tom Kim... leaving Cam Young's 59 in the dust

54 minutes ago

Family of Audrey Wallace struggles for support while daughter in palliative care

57 minutes ago

David Crisafulli determined to ‘snatch defeat from the jaws of victory’

57 minutes ago

Queensland family call for housing assistance for 6-year-old daughter in palliative care

1 hour ago

Video: Joanna Gaines excitedly throws her youngest son Crew a 'fossil dig' party to celebrate his sixth birthday

1 hour ago

Parliamentary inquiry begins investigating new Spirit of Tasmania ships

1 hour ago

The Bikeriders thinks masculinity is a curse — but it looks cool on a motorcycle

1 hour ago

Dressel and Ledecky win again at U.S. Olympic swimming trials. Keep an eye on Kate Douglass, too