The NSW government has secured an agreement with Origin Energy to extend the operations of the Eraring Power Station until August 2027.
The latest analysis from the Australian Energy Market Operator confirms without Eraring NSW would face energy reliability risks from 2025.
The agreement seeks to guarantee a minimum supply of electricity until the new expected closure date and will provide time to deliver the renewable energy, storage and network infrastructure projects required to replace the power station.
The Government and Origin have agreed to an underwriting arrangement that requires the company to:
- decide by 31 March in 2025 and 2026 whether it wishes to opt in to the underwriting arrangement for the following financial year
- share up to $40 million per year of any profits it earns from Eraring, if it does opt in
- claim no more than 80% of losses Eraring makes from its operations from the NSW Government, capped at $225 million each year, if it does opt in
- report the profits or losses it makes from Eraring in its annual report for each year, if it does opt in.
Under the agreement, Origin must also:
- ensure Eraring endeavours to generate at least 6 terawatt hours each year, the equivalent to the typical annual output of 2 of Eraring’s 4 generating units and enough to resolve the forecast reliability gap
- substantially maintain Eraring’s existing workforce of around 220 people, commit to a maintenance plan and adhere to its licence conditions, which includes environmental protections.
The power station’s closure will be managed by Origin in line with its obligations under the National Energy Market and must occur before April 2029.
However, Tim Buckley, director of the think tank Climate Energy Finance, has been highly critical of the NSW government’s decision to extend the life of the Eraring coal-fired power station.
“The news that the NSW government has committed to pay up to $450m of public money to cover likely losses by coal operator Origin Energy to keep Eraring power station open to 2027, 2 years beyond its planned August 2025 closure date, is the devastating consequence of a decade of government planning failure.
“This is essentially Coalkeeper 2.0 – yet another massive coal subsidy funded by electricity users in NSW, with the NSW Government committing to pay Origin to keep all 4 units of the 2.88 gigawatt (GW) Eraring open for another two years,” said Buckley.
He continued to state that it represented the decade-long failure of the NSW government to accelerate the evaluation and approval of key new replacement generation capacity ahead of the closure of coal power generation assets that are known to be at the end of their design life, putting at risk energy security for the people of NSW.
“Clean energy infrastructure projects have been left for years languishing in the development pipeline,” said Buckley.
Data shows that Eraring recorded an increase in emissions of five toxic pollutants in recent years, highlighting its negative environmental impact.
The subsidies required to keep Eraring operational could cost taxpayers up to $150 million per year, according to estimates.