NSW Government secures extension for Eraring Power Station for short term energy security

The extension has received a mixed reception, with some stakeholders praising the move for ensuring energy reliability, while others are critical over the implications on renewable energy and climate goals.

Eraring by Origin energy
Eraring Power Station. Image: Origin Energy

The NSW Government has successfully negotiated a two-year extension for the operation of the Eraring Power Station with Origin Energy. This strategic move is aimed at ensuring energy reliability and stabilising prices during the state’s diversification from coal-fired power to renewable energy sources.

Under the new agreement, Eraring will remain operational until August 2027, addressing concerns highlighted by the Australian Energy Market Operator (AEMO) that without Eraring, NSW could face energy reliability risks starting in 2025. This extension is critical as it provides the necessary timeframe to develop renewable energy, storage, and network infrastructure projects to replace the power station’s output.

Agreement Details and Operational Requirements

The underwriting arrangement between the NSW Government and Origin Energy stipulates that Origin must decide by March 31 in both 2025 and 2026 whether to opt into the agreement for the following financial year. If they choose to participate, they will share up to $40 million annually of any profits with the government and can claim up to 80% of operational losses, capped at $225 million each year. These financial reports will be detailed in Origin’s annual reports.

Operationally, Origin is required to ensure Eraring generates a minimum of 6 terawatt hours of electricity annually, which equates to the typical output of two of its four generating units. Additionally, Origin must maintain its existing workforce of around 220 employees, adhere to a comprehensive maintenance plan, and comply with environmental protection standards.

Stakeholder Reactions

Rewiring Australia has criticized the arrangement, suggesting that since taxpayers are funding the extension, electricity prices should serve the public interest rather than maximizing shareholder profits. Dan Cass, Executive Director of Rewiring Australia, stated, “The NSW government must ensure that the price it sells electricity for reflects the public interest.”

The Climate Council expressed strong opposition to the extension, calling it a failure in climate leadership. Climate Councillor Nicki Hutley remarked, “This decision is a triple failure: it fails policy, it fails climate leadership, and it fails to protect the health and wellbeing of communities across NSW and the nation.”

Dr. Jennifer Rayner, Head of Policy and Advocacy at the Climate Council, emphasized the urgency for renewable energy, noting, “The science is clear: every tonne of coal burned pushes us closer to climate disaster.”

Ai Group acknowledged the necessity of the extension but stressed the importance of accelerating renewable energy projects. Chief Executive Innes Willox commented, “This two year deferral buys some time, but not much. We have to use it well.”

Ultimately, the NSW Government are affirming their decision to extend the operation of the Eraring Power Station as a temporary but crucial step to ensure energy reliability. While the move has garnered mixed reactions, the underlying objective remains to safeguard the state's energy supply and meet climate targets.

To read the agreement between the state of NSW and Origin on its plans for Eraring power station, go to the
NSW Climate and Energy Action website here

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