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Newcastle Herald
Newcastle Herald
National
Matthew Kelly

Coal snap: Eraring power station running out of coal, ASX told

Critical shortage: Origin Energy shares collapsed by 14 per cent after the company slashed profit guidance to the Australian Stock Exchange on Wednesday.

Eraring Power Station is running out of coal, threatening to deepen Australia's worsening energy crisis.

The Lake Macquarie power station, which owner Origin Energy announced in February would close in 2025, has been hit by production issues at Centennial Coal's nearby Mandalong mine.

The company said it had not previously experienced a coal shortage at the 2880-megawatt power station, which supplies about 25 per cent of the state's energy needs.

The shortage is expected to persist well into next year.

Some energy industry analysts described the shortage as a "black swan" event - a metaphor that describes an event that comes as a surprise and has a major ramifications.

The news comes as power bills threaten to add to rising cost-of-living pressures across Australia as inflation sits at a two-decade high.

Origin Energy shares collapsed by 14 per cent after the company slashed profit guidance to the Australian Stock Exchange on Wednesday.

It has also scrapped the division's profit forecasts for the 2023 financial year entirely.

Origin's statement cited challenges, which it said had "deteriorated significantly" over recent weeks.

It is seeking to source more expensive alternative supplies of the fossil fuel by rail.

Coal prices have been rising sharply as an energy crunch is being exacerbated by utilities shunning Russian supplies and scrambling for alternatives in a bid to starve Moscow of the revenue it needs to fund the war in Ukraine.

"There is currently extreme volatility across commodity markets, driven by a combination of global energy supply and security concerns, exacerbated by the impact of the Russian invasion of Ukraine, with subsequent unprecedented increases in international energy prices including coal, gas and oil," Origin Energy said.

"Domestically, coal plant outages and high coal and gas prices have contributed to a steep escalation in wholesale electricity prices."

NSW Treasurer and Energy Minister Matt Kean vowed to "keep the lights on" after Origin Energy's shock announcement in February that it planned to close Eraring power station in mid-2025.

The government has committed to work with industry partners on building the "biggest battery in the southern hemisphere" to help secure the state's power supply.

The 700-megawatt transmission battery would release grid capacity so Newcastle, Sydney and Wollongong consumers could access more energy from existing electricity generation sources.

Origin Energy is also working on plans to build a 700-megawatt grid-scale battery on the site of the power station.

The shortage of coal at Eraring follows a similar incident at occurred at the nearby Vales Point Power Station in March.

Delta Electricity was forced to source coal from the state's central west when its local supplies were interrupted.

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