Origin strikes deal with govt to delay Eraring closure

Aerial image of Origin Energy's Eraring Power Station (fire)
Eraring Power Station

Origin Energy has reached a deal with the New South Wales Government to delay the closure of coal-fired Eraring Power Station by two years, to support security of the state’s electricity supply through the energy transition.

Eraring, a 2,880MW black coal plant on the shores of Lake Macquarie, became fully operational in 1984. Origin had previously targeted closure of the asset by as early as August 2025, subject to market conditions.

Origin has committed to construction of a large-scale battery at Eraring. The first phase of the project consists of a 460MW two-hour battery located adjacent to the power station, with an operational target date of late in the 2025 calendar year.

Related article: New report slams case to keep Eraring on life support

Under the Generator Engagement Project Agreement (GEPA) Origin has agreed to extend operations at Eraring to 19 August 2027. Under the terms of the GEPA, Origin may receive compensation from the state to help cover the cost of Eraring’s operations.

If the GEPA is triggered, Origin may recover a portion of Eraring’s 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. If Eraring makes a profit during that period, Origin will pay the NSW Government 20% of the proceeds, capped at $40 million per annum.

Origin retains the right to determine the final timeline for retirement of all four units of Eraring Power Station. However, under the terms of the GEPA, no state compensation will be payable after FY2027, and the plant must retire in full no later than April 2029.

Origin CEO Frank Calabria said, “We believe this agreement strikes the right balance, with an extension to operations enabling Eraring to continue supporting security of electricity supply in New South Wales through the energy transition, while making compensation available to Origin in the event economic conditions for the plant are challenging.

“This agreement supports Eraring to continue to play an important role in maintaining reliable power for businesses and households through a period in which there remains considerable uncertainty about the volume and timing of new renewables, transmission and firming infrastructure coming online.

“Importantly, today we can give our Eraring employees, our suppliers and the local community greater certainty around the future of the plant as we transition towards its retirement.”

The Climate Council has labelled the decision to keep Australia’s largest coal-fired power station operating well past its scheduled 2025 closure date as a failure of climate leadership.

Related article: AEMO’s grid forecast update warns of “energy gaps”

Climate Councillor and economist Nicki Hutley said, “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.

“As NSW residents endure worsening climate impacts—like the Black Summer bushfires and last year’s Great Deluge—driven by climate pollution, the state and federal governments have failed to build enough clean energy to ensure this coal clunker closes on time.

“As a result, every NSW taxpayer will bear the financial burden of this decision, which undermines climate targets for both NSW and Australia and delays the shift to cleaner, lower cost energy.”


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