New report slams case to keep Eraring on life support

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

A new report by independent think tank Climate Energy Finance (CEF) says that to extend the operation of Australia’s largest coal-fired power station, Origin Energy’s Eraring, beyond its planned phased closure in 2025 would cost NSW citizens up to $150 million per year.

This is on top of more than half a billion dollars of public largesse in the form of coal subsidies to owner Origin.

Related article: CEC: Eraring extension speculation will scare off investors

The report recommends phased closure over 2025 with complete closure by the end of first quarter 2026, and confirms there is enough replacement firmed renewables capacity in the pipeline to offset the capacity withdrawn with no electricity supply gap.

CEF director and report author Tim Buckley, a leading energy analyst and former managing director of investment bank Citigroup, said, “Our report reviews available data to reveal that to keep all four units of Eraring open beyond 2025, NSW electricity users would be slugged for a minimum subsidy estimated at $120-150 million per annum to private operator Origin Energy. This is very, very expensive ‘insurance’ for a non-existent reliability gap.

“It is also completely unconscionable in light of the fact that NSW electricity consumers are already funding Origin to the tune of around half a billion dollars in coal subsidies over 2023 and 2024.

“Origin Energy is operating an asset gifted to the firm a decade ago in 2013—the then state government paid Origin $75 million to take over Eraring when the asset was ‘privatised’— meaning it has already enjoyed an exceptional rate of return way above its expectations for a decade.

“The company reported an average pre tax cash contribution from Eraring of $382 million per annum over FY2019-FY2021 for an asset it was paid to take off the state’s hands. While Eraring’s performance is not disclosed since that time, Origin reported in the first half of FY2024 that it doubled its underlying earnings overall.

“It’s past time for the NSW Government to stop making free bank for the private operator of a hyper-polluting, high-emissions, end-of-life coal clunker by gouging NSW citizens.

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

“The idea that Origin should be gifted yet again with largesse from the public purse—on top of the estimated $468 million coal subsidy since the coal price cap was introduced December 2022—is obscene.”

Read the full report here.

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