AGL Energy’s Liddell coal-fired power station in New South Wales closed on Friday, Australia’s first big power plant closure since Hazelwood’s demise in Victoria in 2017.
Liddell had been operating at less than half its original 2,000-megawatt capacity for some time. Still, its exit sharpens the focus on the challenges facing not only NSW but also the rest of the national electricity market (Nem).
More closures to come
Origin Energy’s black coal-fired Eraring power station is scheduled to be the next to shut, with a planned August 2025 closure.
The plant, also in NSW, boasts almost 2,900MW of capacity, making it Australia’s largest. Relatively costly coal contracts, though, mean Eraring is not always raring to go.
NSW’s Electricity Infrastructure Roadmap, legislated by the state Coalition government in 2020, is intended to bridge the gap. It aims to attract at least 12 gigawatts of wind and solar farms and 2GW of long-duration storage by 2030.
However, the NSW energy minister, Penny Sharpe, says “the roadmap has already been tested by the delays in Snowy [Hydro’s 2.0 pumped storage project] and the foreshadowed possible closure of Eraring”. Snowy 2.0 is scheduled to be ready by December 2027 but more than a few – including in NSW – expect more delays.
Officials say they expect to have sufficient new generation sources to fill the gaps left by Eraring. Early exits by any of the other plants, though, could stretch supplies.
“The government’s approach will be to keep the lights on by getting as much renewable energy into operation as soon as possible, accelerating the roadmap where possible and working with coal-fired operators on their transition to ensure there is enough generation for households and businesses,” Sharpe said.
Interstate competition
NSW relies on Queensland and Victoria for about 10% of its power. Both states, however, have recently accelerated their own renewables rush, particularly in Queensland, a laggard in the decarbonisation shift.
One NSW official said geographic spread should moderate the risks. “It’s really unusual in the [Nem] to have a peak demand event in multiple cities at the same time,” he said this week.
Last June, however, saw a widespread cold snap across eastern states that pushed supplies to the brink. Flooding in coalmines and Covid-delayed maintenance at power plants exacerbated the strain, but a similar event this winter could test the grid, now that Liddell is shut and Queensland’s 825MW coal-fired Callide C plant remains out of action after an explosion.
Historically, summer provides the peak of power demand and with the looming risk of a powerful El Niño the spike in usage might be particularly sharp later this year.
Extra transmission links between states will help, such as the Project EnergyConnect between NSW and South Australia, expected by July 2026. Still, evidence of the ongoing constraints include curbs on existing lines that cut imports by NSW from Victoria by an average 138MW in the first quarter, the Australian Energy Market Operator said on Friday.
Renewables (and storage) to the rescue?
The great bulk of new investment in the electricity sector is directed to renewable energy since costs are well below alternatives, particularly nuclear, the CSIRO and Aemo say. More clean energy should bring down wholesale prices, as happened in the March quarter, Aemo said on Friday.
Renewables now supply about 37% of the Nem’s power, a share that should rise to about 82% by 2030 according to federal goals.
Victoria is banking on offshore windfarms to play a big role in supplying its energy. It also has set a target to have enough storage by 2035 to power half the state’s homes.
However, the industry is warning that while about 5GW of new solar and windfarms started construction nationwide last year, not a lot of capacity was completed. The pipeline of new projects is also beginning to shrink.
Stefan Jarnason, a co-founder of Solar Analytics and an industry veteran, said the NSW government considering an intervention to extend Eraring beyond 2025 will deter renewables investors.
“As long as the government’s going ‘maybe we will or maybe we won’t close this 2GW coal-fired power station’, you’re gonna sit on your hands until they give you a firm signal,” he said.
Better policy would be to make it easier for households to install rooftop solar – or expand what they have – and even add batteries.
“We know that the largest source of new generation every year for the past five years has been rooftop solar and will likely continue to be for the next 30 years,” Jarnson said.
