The New South Wales government says it will hold off any decision about the future of the country’s largest power station until at least next month, after it receives a “health check” on the state’s energy security.
Origin Energy, owner of the 2880MW Eraring plant near Lake Macquarie, also said on Friday that “nothing had changed” on the plan to shut the coal-fired power station no sooner than August 2025.
Both dismissed a News Corp report on Friday that the government had already decided to operate Eraring beyond 2025 because of delays in the construction of new generation capacity such as Snowy Hydro’s 2.0 project and transmission lines.
A spokesperson for the NSW energy minister, Penny Sharpe, said all options remained on the table, as stated previously. The “arms-length” health check survey of the state’s power sector was still being worked on, the spokesperson said.
“Our report is due in early August and the government will consider its response in due course.”
The previous Coalition government had been in talks for about nine months over the future of Eraring prior to Origin’s closure timing announcement in February 2022. Under market rules, a generator is required to declare any plans to shut a major facility three and a half years prior to the exit from the grid.
Coalition insiders have said the cost of extending even half of Eraring’s four units beyond 2025 exceeded $300m a year, excluding the cost of the coal. That sum has probably risen further since, and the new Labor government should consider better uses for the spending, they said.
Origin, for its part, considered the expense would be compensated at least in part by the revenue the state would glean from selling the power. The company, one of Australia’s biggest energy firms, would also likely be among the customers to serve its own retail customers.
Former and serving government officials have also said NSW’s renewable energy road map legislated by the Coalition had the flexibility to be accelerated to reduce the risk of a capacity gap should Eraring close entirely in 2025. A tender process for long-term energy storage in the form of big batteries, for instance, could be expanded.
“If the firming tenders are successful, reliability will be fine,” one person familiar with the process said.
That said, Sharpe has held two briefings for the media to underscore the seriousness of the state’s energy security. Major renewable energy zones, for instance, were running a couple of years behind plans, and costs were higher as governments in many parts of the world seek to accelerate decarbonisation of the power grids.
Separately, one of Australia’s oldest and dirtiest power stations has said it expects to run four years longer than previously forecast.
The Vales Point plant, also located near Lake Macquarie, had been slated to shut in 2029. Its new owner, Sev.en Global Investments, said in a statement it has advised the Australian Energy Market Operator (AEMO) they plan to keep the coal-fired power station going until 2033.
Built in 1978, the 1,320MW plant supplies about a 10th of NSW’s electricity. The government sold it to Delta Energy in 2015 for a $1m, and it was then on-sold last year to the Czech billionaire Pavel Tykač.
“As the 2029 date draws closer, Delta has been able to estimate plant technical capabilities with a greater level of accuracy,” the company said in the statement.
“Given the uncertainties surrounding the capacity of electricity resources over the next 10 years and the urgent need to maintain system security throughout this period, Delta considers it a responsible step to advise AEMO of the availability of Vales Point Power Station’s capacity,” it said.
The Nature Conservation Council of NSW chief executive, Jacqui Mumford, said extending Vales Point “would make it almost impossible for NSW to reach its emission reduction targets”.
“Between 2017 and 2022 this power plant averaged 6.7m tonnes of carbon emissions per year,” Mumford said. “That’s equivalent to the emissions from 2.2m cars – over half the entire passenger vehicle fleet in NSW.”
