Eraring Power Station closure delayed by 2 years (or maybe 4?)

In a logical decision, mooted long in advance & which will surprise almost no-one, it’s being reported on Thursday morning 23rd May 2024 that the NSW Government and Origin Energy have announced that they have reached agreement to extend the services life of Eraring Power Station by a further two years.

1)  The station was slated to close (all four units at the same time) on 19th August 2025

2)  With this news update, we’d expect to see in the ‘MT PASA DUID Availability’ Widget in ez2view (with the AEMO data update for 12:00), we see that this has been extended out to ‘at least’ August 2027…

… but all we have at present is this snapshot with the AEMO data update for 09:00, in which the closure date is still sitting at 19th August 2025:

2024-05-23-at-10-15-ez2view-MTPASADUID-EraringExtended-updated

So we’ll have to wait a bit more to see if reflected in the market data*…

* and, on that note, one of the team joked this morning that we’re yet to see a news media release titled “AEMO releases final final May ESOO update to reflect the delay to Eraring’s closure.”… so soon after Tuesday’s news.

 

(A)  Primary sources of information

Let’s start by going straight to the two sources of the information, as follows:

 

NSW Government Origin Energy

Straight from the horse’s mouth, as it were, is the release from the NSW Government ‘NSW Government secures two-year extension to Eraring Power Station to manage reliability and price risks’ here:

2024-05-23-NSWgovt-Eraring-extension

Interesting details include:

‘The state will not make upfront payments to Origin Energy to operate Eraring. Instead, 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 two of Eraring’s four 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.

Origin has given notice it now expects to close Eraring on 19 August 2027. The permanent closure will be managed by Origin in line with its obligations under the National Energy Market and must occur before April 2029. This ensures Eraring’s closure will contribute to NSW meeting its legislated 2030 emissions reduction target.’

On the other side of the negotiation was Origin Energy, who has released ‘Origin and NSW Government agree to delay closure of Eraring Power Station’ here:

2024-05-23-Origin-Eraring-extension

Origin notes …

‘Under the Generator Engagement Project Agreement (GEPA) Origin has agreed to extend operations at Eraring to 19 August 2027. Origin has submitted a revised notice for closure to the Australian Energy Market Operator (AEMO) consistent with this timing.’

… but (see ez2view snapshot above above) the notice to AEMO was later than required to be in their update for 09:00 this morning, so will presumably be in the AEMO update for 12:00.

Continues…

‘Under the terms of the GEPA, Origin may receive compensation from the State to help cover the cost of Eraring’s operations and will endeavour to generate at least 6 TWh of electricity during each of the extension periods of FY2026 and FY2027. To be eligible to receive compensation, Origin must advise the State by March whether it will trigger the GEPA for the coming financial year. 

If the GEPA is triggered, Origin may recover a portion of Eraring losses calculated for that financial year using an agreed formula that takes into consideration the extent to which the plant’s operating and capital costs exceed an agreed revenue profile, capped at $225 million per annum. In the event Eraring operations are profitable during that period, Origin will pay the NSW Government 20 per cent of Eraring’s agreed profit, capped at $40 million per annum.’

… and there is more to read there…

 

There’s probably more to come, from each …

 

 

(B)  Media Reporting

So far today I have come across commentary in a range of places, including the following:

1)  Here on WattClarity®:

(a)  There’s this note, obviously

(b)  But there’s also a long history of articles collated here about ‘Closure of Eraring’.

2)  In Energy Source & Distribution I have seen…

(a)  This was the first article I saw this morning, with ‘Origin strikes deal with govt to delay Eraring closure’.

3)  In the Australian I have seen…

(a)  In an evolving story online in the Australia, Colin Packham writes ‘Eraring to stay open at least two more years’

2024-05-23-theAustralian-Eraring

(b)  Then Colin Packham wrote ‘NSW’s largest coal power station extended by at least two years’.

(c)  At 19:03 on Thu 23rd May, Glenda Korporaal wrote ‘Clear air ahead for Origin after Eraring deal’.

(d)  At 00:00 on Fri 24th May the Editorial says  ‘Eraring deal welcome sign of pragmatic Labor Right’:

(e)  More to come, perhaps …

4)  In the AFR I have seen…

(a)  Also top of the scroll on the AFR online this morning is Campbell Kwan writing ‘NSW-Origin deal the culmination of difficult negotiations’:

2024-05-23-AFR-Eraring

(b)  Then Ben Potter (and Elouise Fowler joining, as the story grew) wrote what hit the front page in print on Friday as ‘Coal plant could ‘limp into the 2030s’’:

IMAGE TO COME

(c)  Anthony Macdonald (as Chanticleer) wrote ‘Why NSW had to underwrite Origin’s coal-fired plant’.

(d)  Jennifer Hewett wrote what was titled in Friday’s print edition  ‘Coal’s staying power another wake-up call’.

(e)  More to come, perhaps …

5)  In the Guardian I have seen …

(a)  At 08:35 this morning Peter Hannam wrote ‘NSW government extends life of Australia’s biggest coal-fired power station by two years to 2027’.

(b)  Nothing else, at this point…

6)  In SMH and the Age I have seen …

(a)  Alexandra Smith wrote ‘NSW government throws Eraring power station a lifeline until 2027’.

(b)  Thursday afternoon there was also ‘The Eraring bill will max out at $450 million. It’ll be much worse if the lights go out’.

(c)  Nothing else, at this point…

7)  In RenewEconomy I have seen …

(a) Giles Parkinson wrote ‘Eraring coal closure delayed two years, possibly four, “to keep the lights on”’.

(b)  More to come, probably …

8)  In PV Magazine I have seen …

(a)  Nothing at present.

(b)  Nothing else, at this point…

9)  In the ABC I have seen …

(a)  Holly Tregenza and Isobel Roe wrote ’Australia’s largest coal-fired power plant Eraring in Lake Macquarie to stay open for two extra years’

(b)  Nothing else, at this point…

As a reader here, if you come across any other useful commentary, feel free to add as a comment below.

 

(C)  Comments from industry organisations following the news

As time permits, we might add in references to this from various industry organisations:

1)  From WHO?

(a)  Nothing at this point.

 

 

(D)  Social Media commentary about this

As time permits, we might add in references to the Update to the ESOO (we see) in various social media feeds:

1)  Firstly, from us:

(a)  Following this article we noted this on this Twitter Update and in this LinkedIn Update;

(b)  With more to come…

2)  In a quick lunchtime scan of social media, I noted the following comments might be of interest to readers here:

(a)  Dave Smith has added a comment to a LinkedIn update by Giles Parkinson … might be worth watching what follows.

(b)  Christian Zuur has added his own comments and questions via LinkedIn.

(c)  Dylan McConnell has linked back to an old conversation thread on Twitter

(d)  David Osmond has added his own thoughts via LinkedIn

 

 

 

(E)  Logic of the extension

Two days ago (Tue 21st May) saw the AEMO publish an update to the 2023 ESOO, and it has  garnered a bit of attention.  I had time to read it last night and a number of things jumped out at me (more on other things later), including this line on p43/46:

‘System strength shortfalls of 1,420 megavolt amperes (MVA) and 1,165 MVA are forecast at Newcastle and Sydney West respectively from 1 July 2025, …’

Now 1st July 2025 was before Eraring had been slated to close … but surely it would be apparent to everyone that the Eraring closure would not have helped, and would likely have exacerbated this issue?

Yet we have heard next-to-nothing about those types of considerations about ‘Keeping the Lights on Services’ from those who have been pleading that ‘everything will be ok if Eraring closes in August 2025’.

As noted above, there’s been prior discussion in articles collated here about ‘Closure of Eraring’.


About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

2 Comments on "Eraring Power Station closure delayed by 2 years (or maybe 4?)"

  1. Perhaps the more correct headline for the SMH and the Age might have been “Origin Energy throws NSW a Lifeline” ? So aside from all of the renewables running late – assuming 2 years is enough to get them back on track, who is building the 1500MW of OCGTs to keep the lights on during the cloudy, windless weeks in the future?

  2. So a $37.50/MWh bounty then – doesn’t seem too bad, really.

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