The odds of Eraring Power Station remaining open beyond mid-2025 have shortened after the Australian Energy Market Operator (AEMO) warned that NSW faced increased reliability risks because renewable energy projects are not coming online fast enough.
The state government has been locked in talks with Origin Energy for months about the future of the 2880 megawatt plant. An announcement is expected in the near future.
In its latest 10-year reliability outlook update AEMO warned Eraring may need to be delayed to offset the slow rollout of renewables.
"While new generation and storage capacity continues to increase, project development and commissioning delays are impacting reliability throughout the horizon," AEMO chief executive Daniel Westerman said.
"Industry and governments are responding to the reliability risks from retiring coal by investing in new infrastructure to ensure a reliable and secure electricity supply going forward.
"The urgency for the timely delivery of transmission, generation and storage, and use of consumer electricity resources to support the grid, remains to meet consumers' energy needs."
NSW Energy Minister Penny Sharpe said AEMO's most recent warnings would factor into conversations about the future of Eraring.
Of particular concern is the delay of a new transmission line between NSW and South Australia as well as the a decision to scarp plans to return two gas and diesel generators in SA to service.
The NSW-SA transmission line is Project EnergyConnect, which is now expected to deliver full power from mid-2027 instead of 2026.
Mr Westerman said it was critical that new generation and transmission projects, such as the Hunter Transmission Project, were delivered on time.
"While new generation and storage capacity continues to increase, project development and commissioning delays are impacting reliability throughout the horizon," he said.
Those opposed to extending Eraring's lifespan point to modelling showing three giant battery projects, including one on the site of the former Liddell Power Station, will be enough to fill the reliability gap left by the planned closure of Eraring Power Station.
Institute of Energy Economics and Financial analysis (IEEFA) modelled the impact of the federal government's first tender under the Capacity Investment Scheme.
Under the changes to the scheme, announced on 23 November 2023, the federal government will underwrite 23GW of variable renewable generation by 2030 (along with 9GW of storage), accounting for most of the new large-scale renewable generation capacity required.
The remaining 13GW would need to come from other sources, such as the NSW Electricity Infrastructure Roadmap, which has a goal of 12GW of renewables by 2030.
AEMO plans to bid for "reliability reserves" to shore up the market in NSW and Victoria over summer, such as paying for additional generation or for large energy users to reduce demand.
