Origin Energy may delay closing Eraring coal power station

ORIGIN Energy’s plans to close its Eraring coal power station seven years ahead of schedule, might now be put on hold over fears the country will run into electricity shortages. This is due to ageing coal plants closing potentially faster than new renewables and storage projects coming online.  

Last year Origin announced it would close Eraring – Australia’s largest coal-fired power station – in 2025 instead of waiting until 2032 when the site would reach the end of its technical life.  

The news subsequently sparked warnings of higher electricity prices, while concern spread over the likelihood of hundreds of job losses following Origin’s rejection of a New South Wales (NSW) government rescue bid to pay for it to keep operating, or to lease it.  

Significantly more workers than Eraring power plant staff stand to lose out when the closure takes place, including 500 workers who visit Eraring for months at a time to do maintenance work, 250 miners at Myuna Colliery whose sole customer is Eraring, and the many local businesses that supply the power station. 

Despite maintaining that the “base case” remained to close Eraring in August 2025, Origin has said it would now consider changing the end date should market conditions change.  

Renewable alternatives

Hopes to avert electricity shortages in the state had been resting on the completion of Snowy Hydro 2.0, a major pumped-hydro expansion of the existing Snowy scheme. 

The project involves linking two existing dams, Tantangara and Talbingo, through 27 km of tunnels and building a new underground power station. Once up and running, Snowy 2.0 will provide an additional 2,000 MW of dispatchable, on-demand generating capacity and approximately 350,000 MWh of large-scale storage to the National Electricity Market.   

However, the federal government-owned project has strayed far from its original specifications; a highly optimistic target of 2021 for first power, and a budget of A$2bn (US$1.3bn). Numerous setbacks including the collapse of one of its main contractors, Clough, as well as soft ground conditions playing havoc with the project’s tunnel boring machine, named Florence, have now pushed up costs to around A$5.1bn, while the start date has been delayed to 2028. 

The delay, coupled with the retirement of at least five other power stations this decade, has led the Australian Energy Market Operator (Aemo) to warn that gaps in reliable supply will emerge if Eraring shuts, and other existing and committed projects are not delivered ahead of the closure. 

Among the measures aimed at plugging the energy gap is a 700MW / 1400 MWh “Waratah Super Battery”, the largest network standby battery in the Southern Hemisphere, the NSW government said. 

“The Waratah Super Battery means NSW will meet the national reliability standard after the potential closure of Eraring in 2025,” said Matt Kean, NSW’s energy minister and treasurer. “In addition to the Waratah Super Battery, NSW is issuing a tender for 380 MW for firming infrastructure to further improve reliability.” 

Origin itself is also planning on building a 700 MW / 2,800 MWh battery on the Eraring site to store renewable energy. The firm, which reported a net loss of A$2.29m in 2021, following a net profit of $83m in 2020, has received a A$18.4bn takeover bid by Brookfield Asset Management and private equity firm EIG. The deal, if it takes place, would rank as one of the biggest private equity-backed buyouts of an Australian company, Reuters reports. 

China’s rapidly expanding coal power capacity

Worries of further blackouts and concerns about energy shortages have also prompted China to fall back on coal power.  

According to a report from the Center for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM), the Chinese government approved permits for 106 GW of new coal-fired generation capacity in 2022, the equivalent of two large coal power plants per week.  

Last year, “the coal power capacity starting construction in China was six times as large as that in all of the rest of the world combined,” the report said. It condemned the Chinese provinces’ reasons for permitting a large amount of new coal power plants, which had been put down to “supporting power capacity to ensure grid stability and the integration of renewable energy”. This doesn’t hold water, the report said as the plants are intended to run at baseload utilisation. Instead the report suggests that these specific provinces are simply “laggards in growing clean energy generation to meet their demand growth.”