It would be foolish to close Eraring and expose NSW to energy shortages

The Minns government faces a test of its economic and environmental performance as the state’s clean energy transition hits a major roadblock.

As reported by the herald’According to Michael McGowan, a review of the NSW power grid has recommended the Labor government strike a deal with Origin Energy to extend the life of Eraring, Australia’s largest coal-fired power station.

The sprawling power plant at Lake Macquarie on the Central Coast is slated to close in 2025, but there are growing fears the withdrawal could leave a gaping supply gap that threatens grid reliability and soaring utility bills for homes that need it are already struggling to make ends meet.

Any deal between the New South Wales government and Origin will likely see hundreds of millions of dollars in public funds used to maintain the aging 2,880-megawatt facility that was privatized in 2013 by the then-coalition government.

While Prime Minister Chris Minns, Treasurer Daniel Mookhey and Environment and Energy Secretary Penny Sharpe have yet to make a final decision on what to do, a lifeline for Origin has been in the works for months. “The government has always said that all options are on the table when it comes to earnings,” Sharpe said on Tuesday. Mookhey was also in talks with Canadian investment giant Brookfield Asset Management, which has launched a multi-billion dollar acquisition of Origin.

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For its part, Origin seems poised to change its 2025 closure plans. A spokesman said on Tuesday the company continues to be “working with the New South Wales Government, our people and the local community on plans to close the plant”.

Eraring represents the collision between a well-intentioned and much-needed clean energy transition and the harsh reality of high energy prices and unreliable supply. This is a story that is playing out in other Australian states and around the world.

The Australian energy market operator has warned that households and businesses in every state on Australia’s east coast face electricity shortages from 2027 onwards as the threat of closure of several coal-fired power plants collides with delays in the construction of key new gas and clean energy projects to replace them. Delays in the Snowy 2.0 hydropower project are also exacerbating the problem.

An extension of the Eraring Agreement would anger voters who believe Labor governments at the state and federal levels are accelerating the demise of fossil fuels. On Saturday, German Climate Change and Energy Secretary Chris Bowen underscored what is at stake when he told senior Labor and business leaders at Royal Randwick Racecourse that the Black Summer bushfires of 2019 and 2020 will fall into the 2040s, the annual would be the norm unless severe Policy changes are coming to bring global temperature rise under control.

Justin Scaccy

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