The operators of Australia’s largest coal-fired power plant announced Thursday that it will close in 2025, several years earlier than planned, claiming that the facility is no longer viable given the low cost of renewables.
The “influx of renewables” was “undermining the economics” of Origin Energy’s massive Eraring plant, which is located north of Sydney and has been in operation for decades.
Australia is one of the world’s largest coal producers, and the climate-damaging fuel is a major source of export revenue, with the current administration encouraging the construction of more coal-fired power plants.
According to the company, a notice has been submitted to the Australian Energy Market Operator (AEMO) indicating the possibility of early retirement of the plant after the required three-and-a-half-year notice period.
Eraring plant is the largest of the 16 remaining coal-fired power plants supplying the National Energy Market (NEM), with seven already scheduled to close by 2035 and the final by 2051.
According to ABC, Origin employs 240 people at the power plant, but contractors bring the total number of employees to around 400.
While coal-generated electricity continues to supply 60% of power in the National Energy Market, this is down from 87% when records began in 2006.
Origin’s only coal-fired power station, Eraring, will generate energy from a mix of renewables and gas.
Instead, the company stated that it has “well-progressed plans” for 700 megawatts of battery storage on the site.
“Origin’s proposed exit from coal-fired power plant generation reflects the NEM’s ongoing, rapid transition to cleaner sources of energy,” said Frank Calabria, the company’s CEO.
“The reality is that coal-fired power plant’ economics are being put under increasing, unsustainable pressure by the cleaner, lower-cost generation, such as solar, wind, and batteries.”
Origin’s decision to close Eraring was months in the making, according to NSW Energy Minister Matt Kean.
“A few months ago, Origin approached me about the possibility of this decision,” he explained.
“During that time, we worked to create a comprehensive plan for dealing with the possibility of today’s decision. This plan will entail ensuring that we focus on maintaining system reliability while also putting downward pressure on prices.”
Mr. Kean expressed confidence that AEMO would grant regulatory approval to close the plant.
“Despite the closure of Eraring in 2025, AEMO, the independent system operator, has considered our plan and stated that we will meet our energy security target,” he told reporters.
“Two years from now, our system will be more reliable than it was two years ago.”
“Today, I’m announcing the construction of the largest battery in the Southern Hemisphere.” A 700-megawatt transmission battery to free up capacity in our transmission system and allow users to access more of our existing supply.”
“Today, I’m announcing the construction of the world’s largest battery in the Southern Hemisphere. A 700-megawatt transmission battery will free up capacity in our transmission system, allowing users to tap into more of our current supply.”
Daniel Westerman, the CEO of AEMO, appeared unfazed by the news.
“Planned additional transmission capacity, including the announced battery,” he said in a statement, “will provide the state with enough electricity generation to meet the Energy Security Target by the time Eraring closes.”
Angus Taylor, Mr. Kean’s federal counterpart, had a different take on the closure, calling it “bitterly disappointing” for both energy users and power workers.
In a statement, he said, “The early and abrupt closure of this 2880MW generator will leave a significant gap in reliable generation in the National Electricity Market, representing more than 20% of NSW generation output.”
“Affordability and reliability are jeopardized by closure without like-for-like replacement.”
Chris Bowen, Labor’s shadow minister for climate change and energy, emphasized the two parties’ differences.
In a statement, he said, “Labor welcomes the NSW Government’s commitments to build a large battery to ensure reliability, and to bring forward new generation capacity to ensure affordability.”
“The NSW Liberals and Federal Labor are doing what Scott Morrison refuses to do: they are recognizing and planning for the market realities of the global energy transition.”
Greens leader Adam Bandt suggested that all parties work together to develop a comprehensive plan for phasing out coal-fired power plants.
“We urgently require a national climate and energy plan to manage the accelerating transition away from coal,” he said in a statement.
“The climate crisis and falling costs are fueling a renewables revolution that will not be stopped.”
In a report released a year ago by the think tank, the Institute for Energy Economics and Financial Analysis, and consultancy Green Energy Markets, Eraring power station was identified as the coal power plant most likely to be unprofitable by 2025.
According to Green Energy Markets’ Tristan Edis, the plant’s closure may extend the life of some other coal-fired power plants, but not for long.
“The other higher-cost and marginal coal generators, such as Gladstone and Vales Point, will likely remain under operational and financial stress from having to constantly avoid the daily solar surge and accompanying power price drop,” he told ABC News.
“According to Green Energy Markets, over the next four years, we will see around 3,000MW of rooftop solar added each year.
“The reality is that an increasing number of electricity consumers have decided that solar provides an appealing option for their power needs.
“As Origin has recognized, this has fundamentally changed the shape of the electricity market, making it unsuitable for inflexible, baseload coal generators.”
“Unfortunately, many of our politicians are unwilling to recognize and adapt to this reality.”
Origin Energy slashed the value of its assets by more than $1.5 billion in July of last year.
Lower electricity prices, “driven by new supply expected to come online, including both renewable and dispatchable capacity, impacting the valuation of the generation fleet, particularly Eraring power station,” wiped out $583 million from the value of its Eraring power station.