Eraring can close in 2025 and lights will stay on—here’s how

Aerial photo of Eraring Power Station on a sunny day (speculation)
Eraring Power Station (Image: Shutterstock)

A new report by independent public interest think tank Climate Energy Finance (CEF) says it is possible to close Australia’s biggest coal power station, Eraring, on time in 2025, secure supply, put downward pressure on prices and drive decarbonisation of industry.

The Lights Will Stay on: NSW Electricity Plan 2023-2030 recommends continuing the current run-rate of 1.2GW annually of NSW rooftop solar installs and front-end loading at least 1.2GW annually of utility-scale wind and solar within the state to 2030.

This would replace the electricity generation capacity equivalent of 2.88GW at Eraring, and the 1.32GW Vales Point coal power station, earmarked for closure in 2028/29 (when it will be an entirely end-of-life 50-51 years of age, despite recent commentary from its owners about a possible extension).

Related article: Staggering Eraring closure would lower energy price impact

CEF’s analysis shows that there are more than enough renewable energy projects in the investor pipeline and that capital is ready and available, assuming grid connection and approvals processes can be expedited to lock in both early final investment decisions by investors and timely construction.

Delaying Eraring’s closure would require NSW to pay at least an estimated $200-400 million per annum in public subsidies to its operator, Canada’s Brookfield—funding which would be far better invested in accelerating the renewables build out. Delay would also undermine both the NSW government’s climate policy, and the federal government’s 82% by 2030 renewables target and and 43% emissions reduction target. Talk of delaying Vales Point’s closure ignores obviously increasing risks of catastrophic failure at any point in time, given it reaches the end of its 50 year lifespan in 2028/29.

The report calls on NSW Energy Minister Penny Sharpe to lift NSW’s 2030 renewables target to at least 70% and:

  • Match the federal government’s program to support rooftop solar, storage and energy efficiency upgrades to 60,000 social housing homes with funding from the $1bn NSW Energy Security Corporation, immediately alleviating energy poverty for those most vulnerable.
  • Accelerate the rooftop solar and batteries program rollout on 21,700 buildings across 2,200 public schools.
  • Move the federal government to lift the Small-scale Renewable Energy Scheme (SRES) cap from 100kW to 1,000kW to speed commercial and industrial installs of distributed solar (helping deliver half of new capacity needed from DER with no grid delays).
  • Accelerate approvals for utility-scale renewable energy projects that must be built rapidly ahead of closures, focusing on the strategic prioritisation of plants able to gain grid connection.
  • Accelerate and upscale NSW Renewable Energy Zone (REZ) tenders and long-term energy service agreements (LTESA) tenders, providing revenue certainty for private investment in new renewables.
  • Flood the market with an underwritten low cost $25-35/MWh electricity floor price and minimum volume offtakes for new utility solar, de-risking these projects for investors; and expedite approvals to bring them online within two to three years.
  • Direct Transgrid and Essential Energy to reassess their grid transmission and distribution capacity constraints, in light of PowerLink in Queensland finding that 10GW of new renewable energy can be added even before major grid transmission projects are completed.

Report author and CEF director Tim Buckley said, “NSW has led Australia on the development of its REZ roadmap, but we know grid transmission, like pumped hydro storage, is slow to get community buy-in and then be built. Meanwhile, the existing grid has plenty of spare capacity to accommodate within-state distributed rooftop solar and behind-the-meter storage in homes and businesses, as well as infill utility-scale wind and solar located strategically across NSW.

Related article: Origin to develop $600 million large-scale Eraring battery

“There is no case to delay the planned closure of Eraring and pay operator Brookfield the estimated $200-400 million in public subsidies to do so. This money should be invested in NSW’ energy transition. We call on Energy Minister Penny Sharpe to take the action detailed in our report and flood the market with renewables firmed by accelerated deployment of  batteries, to drive more capacity. This will ensure supply and reduce wholesale electricity prices, putting permanent downward pressure on energy bills whilst also better aligning our decarbonisation pathway with the climate science.

“The NSW government and AEMO should take Friday’s announcement by the owners of Vales Point that it may extend the life of the plant to 2033 with a massive bag of salt. The idea that a 50-year-old plant can just be extended another four years without serious risk of catastrophic failure is ridiculous, and no desktop study can ensure the end-of-life plant’s reliability.”

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