18/02/2022

(AU SMH) Origin Energy To Bring Forward Closure Of Australia’s Largest Coal-Fired Power Plan

Sydney Morning Herald - Nick Toscano | Mike Foley

Origin Energy has brought forward plans to close Australia’s largest coal-burning power station to 2025, seven years earlier than scheduled, as the rollout of clean energy across the country accelerates.

The power and gas supplier has notified authorities it intends to shut down the 2880-megawatt Eraring generator at Lake Macquarie in NSW after the required notice period of three and a half years, saying “rapidly changing” energy market conditions have hammered the plant’s viability.

Origin’s giant Eraring power station is the largest coal-fired generator in Australia. Credit: Nick Moir

Eraring was originally intended to close in 2032.

“Origin has today submitted notice to the Australian Energy Market Operator for the potential early retirement of Eraring Power Station in August 2025,” chief executive Frank Calabria said.

“Origin’s proposed exit from coal-fired generation reflects the continuing, rapid transition of the National Energy Market as we move to cleaner sources of energy.”

The influx of large-scale wind and solar farms coupled with an ongoing boom in the uptake of rooftop solar panels have been radically reshaping the industry and slashing daytime wholesale prices to levels at which the dominant sources of power – coal and gas – struggle to compete and have been forced to regularly operate at a loss.

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Origin’s early exit from coal follows similar moves by other major power utilities.

EnergyAustralia last year announced it would shut Victoria’s Yallourn coal-fired power plant in 2028, four years earlier than planned, while AGL, the largest Australian power company, has pledged to bring forward the closure dates of its coal assets in Victoria and NSW by several years.

“Australia’s energy market today is very different to the one when Eraring was brought online in the early 1980s,” Mr Calabria said.

“The reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries.”

Because electricity production is a dominant source of Australia’s emissions, reducing output from coal plants would help sharply reduce the national carbon footprint.

However, concerns have been building across the industry that unexpectedly early shutdowns of coal-fired generators could threaten the reliability of the nation’s power market and cause price volatility in the future.

Federal Energy Minister Angus Taylor said Origin’s decision was “bitterly disappointing”. Credit: Alex Ellinghausen
Federal Energy Minister Angus Taylor condemned Origin’s decision on Thursday, describing it as “bitterly disappointing” and warning the closure of Eraring, which accounts for 20 per cent of NSW generation output, would leave a “considerable gap” in reliable generation.

“This decision is bitterly disappointing for all energy users – from households to small businesses to heavy industry – who rely on affordable, reliable energy to prosper,” he said.

“It is also bitterly disappointing for the 400 workers and communities in the Lake Macquarie region.”

The Morrison government argues fossil fuels are vital to ensuring affordable and reliable power as the clean-energy transition accelerates, and is pushing ahead with a plan to build a Commonwealth-owned gas-fired generator at Kurri Kurri in NSW.

Mr Taylor said on-demand, reliable power including coal, gas and pumped hydro was crucial to supporting renewable energy during times when the wind is not blowing and the sun is not shining.

He called on private energy companies to “step up” and increase investment in projects to replace Eraring.
“The reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries.”
Origin chief Frank Calabria
“Closure without like-for-like replacement puts affordability and reliability at risk,” he said. “They owe this to their customers as providers of an essential service.”

Origin is planning to build a 700-megawatt battery at the site of Eraring as part of its “replacement plan”.

Mr Calabria on Thursday said firm commitments across the wider energy industry to build out more on-demand energy capacity in the market in coming years, along with new transmission infrastructure that can better-enable the flow of energy from one part of the east coast to another, would “more than compensate” for Eraring’s exit.

“We will continue to assess the market over time, and this will help inform any final decisions on the timing for closure of all four units,” he said.
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AEMO, the market operator, agrees.

“Planned additional transmission capacity – including the announced battery - will give the state access to enough electricity generation to meet the Energy Security Target at the time Eraring closes,” AEMO chief executive Daniel Westerman said.

While coal still makes up most of the nation’s power, the rollout of renewables is squeezing it further out of the market.

In the three months to December 31, black coal fell to its lowest seasonal average share since the east-coast electricity market was created in 1998, while gas recorded its lowest since 2003.

Renewable energy, meanwhile, accounted for a record-high average of 34.9 per cent of generation, beating the previous record of 31 per cent.

Origin on Thursday vowed it would consult with Eraring’s workforce about the timing of any potential retirement, and provide a “generous support package during any transition period”.

“This will include re-skilling, career support and redeployment into new roles, where possible,” the company said.

“Origin intends to engage with governments and the local community to determine the most appropriate transition planning for any eventual closure.”

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