The owner of Australia’s largest coal-fired power plant, the Eraring station on the shore of Lake Macquarie in New South Wales, has signalled it will close in 2025, seven years earlier than previously planned.
Origin Energy has given the Australian Energy Market Operator (Aemo) notice that will allow it to shut the 2,880MW black coal generator from August 2025. The company said its decision reflected “the rapidly changing conditions in the national electricity market, which are increasingly not well suited to traditional baseload power stations”.
It is the latest in a series of early coal plant closure announcements prompted by the rapid rise of cheaper renewable energy, which reached more than 30% of grid generation last year and is forecast to hit at least 69% by 2030.
AGL last week announced it would bring forward the closure of the Bayswater generator in NSW from 2035 to no later than 2033, and its brown coal-fired Loy Yang A plant in Victoria from 2048 to 2045. EnergyAustralia’s Yallourn power plant, also in the Latrobe Valley, will shut in 2028 rather than 2032.
Origin’s chief executive, Frank Calabria, said the energy market was now “very different” from when Eraring began fully operating in 1984. The plant provides about a fifth of NSW’s electricity generation. “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,” he said in a statement.
Matt Kean, the NSW treasurer and energy minister, said he was disappointed by Origin’s decision and acknowledged the closure would cause problems for the grid if not replaced. He promised the state would build what he described as the “biggest battery in the southern hemisphere” in response.
Called the “Waratah super battery”, it would have a 700MW/1400 megawatt hour capacity, and would be initially funded through a new Transmission Acceleration Facility promised to “fast-track the delivery of critical transmission infrastructure”. He said the state’s electricity infrastructure roadmap, supporting a number of new renewable energy zones, would receive an additional $84m funding and another $47.5m would be spent on pumped hydro storage.
“I’m absolutely confident that [the battery’] will be done in time in 2025 to put downward pressure on electricity prices and … ensure that we can give the lights on,” Kean said.
The federal energy and emissions reduction minister, Angus Taylor, said Origin’s announcement was “bitterly disappointing for all energy users” who “rely on affordable, reliable energy to proper”, the plant’s 400 workers and the Lake Macquarie community.
He said the “early and sudden closure” would leave a “considerable gap in reliable generation” and could cause a spike in electricity prices.
“The Morrison government has been consistent and clear. On-demand reliable power such as coal, gas and pumped-hydro is needed to balance the record levels of intermittent forms of energy such as wind and solar,” Taylor said. “Closure without like-for-like replacement puts affordability and reliability at risk. It is incumbent on energy companies to step up and deliver like-for-like replacement capacity. They owe this to their customers as providers of an essential service.”
Aemo’s chief executive, Daniel Westerman, said planned additional capacity, including new transmission and the battery announced by the NSW government, meant the state would have access to enough electricity generation to meet its energy security target when Eraring closed. “This announcement also reaffirms the need for timely development of transmission projects,” he said.
But Bruce Mountain, a director of the Victoria Energy Policy Centre, said the early exit of Eraring was “a real call to arms for the NSW government”, and estimated the state would need 4400MW of new wind or 6200MW of solar capacity to replace it. That would mean accelerating the rollout of rooftop solar, household battery storage, large-scale renewables and transmission links into Newcastle, Sydney and Wollongong, he said.
Calabria said Origin had consulted extensively with the NSW government before the announcement, and believed “mechanisms are now in place” to guide future investment in supply to “more than compensate” for Eraring’s closure. It would participate in NSW’s renewable electricity roadmap process – promised to support 12GW of clean energy and 2GW of storage – as it looked to install a battery with a capacity of up to 700MW at the site, he said.
“We will continue to assess the market over time, and this will help inform any final decisions on the timing for closure of all four units [at Eraring],” he said. “We acknowledge this news will be challenging for many of our colleagues, suppliers and the local community. This is only the start of the process, and we commit to consulting with our people, and supporting them, through any potential closure.”
The NSW government argues there is significant interest in building the renewable energy generation and support capacity needed. Earlier this week, Kean said investors had expressed in building more than $100bn of capacity in a new renewable energy zone in the state’s Hunter Valley region.
Aemo last year released a draft integrated system plan – an “optimal development path” for the grid – that suggested the country’s coal-fired power plants were likely to shut at almost triple the pace that was then expected. It expected a ninefold increase in large-scale wind and solar capacity and a trebling of the “firm” energy capacity that can be dispatched whenever required.
The Greens Leader, Adam Bandt, said the Eraring announcement showed “why Australia urgently needs a credible climate and energy plan”.
“Everyone could see this coming. The climate crisis and falling costs are driving a renewables revolution and it’s not going to stop,” he said. “Instead of lying to coal workers and their communities about a future for coal, Liberal and Labor need to get real and join the Greens with a plan that secures workers’ futures.”
Calabria said Origin had reserved $240m for the restoration and rehabilitation of the Eraring site, based on an expected closure date of 2032. That would continue to be reviewed, with the timing in part dependent on investment in a potential battery and an ash dam at the site.
