The NSW Government was stunned after Origin announced it will close its Eraring coal-fired power plant near Newcastle seven years earlier than expected.
Eraring supplies about 20 per cent of NSW electricity and employs about 1000 people directly and indirectly.
The Government moved quickly to assure NSW electricity users that the Government with partners will fasttrack a new battery plant and there would be no hike in electricity costs or threat to energy supplies.
NSW Energy Minister and Treasurer Matt Kean said he was disappointed by Origin's announcement of the early closure of Eraring.
"The planned closure of Eraring is especially tough for its workers, their families and local communities, many of whom have helped power NSW for decades and my expectation is that Origin does the right thing by its workers.
"Origin raised the possibility of this closure a number of months ago and, with advice from the Australian Energy Market Operator (AEMO), we have developed a comprehensive plan to ensure that NSW has reliable and affordable electricity."
To ensure energy reliability, the NSW Government will work with industry partners to install the Waratah Super Battery, a 700MW/1400MWh grid battery, by 2025 to release grid capacity so Sydney, Newcastle and Wollongong consumers can access more energy from existing electricity generation, he said.
Origin told the stockmarket on Thursday it was exiting baseload power plants.
Origin submitted notice to the Australian Energy Market Operator (AEMO) indicating the potential early retirement of Eraring power station at the end of the required three and half year notice period.
"This reflects the rapidly changing conditions in the National Electricity Market (NEM), which are increasingly not well suited to traditional baseload power stations and challenging their viability," it said.
Origin CEO Frank Calabria said, "Origin has today submitted notice to AEMO for the potential early retirement of Eraring Power Station in August 2025.
"Origin's proposed exit from coal-fired generation reflects the continuing, rapid transition of the NEM as we move to cleaner sources of energy. Australia's energy market today is very different to the one when Eraring was brought online in the early 1980s, and 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.
"To enable Origin to support the market's continued transition to renewables, we intend to utilise the Eraring site beyond any retirement of the coal-fired power station, with plans to install a large-scale battery.
"We have carefully weighed Eraring's future for some time, which has included extensive consultation with the NSW government to identify what options might exist for the future of the plant. Eraring is a high-quality asset, run by a skilled and dedicated team, that has worked tirelessly to supply reliable and affordable energy in NSW for four decades. However, it has become increasingly clear over the last few years that the influx of renewables has changed the nature of demand for baseload power.
"At the same time, the cost of renewable energy and battery storage is increasingly competitive, and the penetration of renewables is growing and changing the shape of wholesale electricity prices, which means our cost of energy is expected to be more economical through a combination of renewables, storage and Origin's fleet of peaking power stations."
Mr Kean said that NSW had the strongest reliability standard in the country - the Energy Security Target - "which aims to have sufficient firm capacity to keep the lights on even if the State's two largest generating units are offline during a one-in-ten year peak demand event."
"Our giant grid battery will act as a shock absorber, so that transmission capacity currently kept in reserve to handle shocks, such as lightning strikes, can be freed up to transfer energy to consumers.
"AEMO has advised that this additional transmission capacity will give the State's consumers access to enough existing electricity generation to meet the Energy Security Target at the time Eraring closes," Mr Kean said.
To keep downward pressure on electricity prices, the NSW Government will also accelerate the delivery of new supply through the NSW Electricity Infrastructure Roadmap (Roadmap), he said.
"The best way to put downward pressure on electricity prices is to increase supply and the Roadmap provides us the tools to do just that," Mr Kean said.
"Under the Roadmap, the Consumer Trustee tenders for new renewable generation and storage and we will be investing $84 million to accelerate its delivery.
"We are also establishing a Transmission Acceleration Facility to accelerate the delivery of priority transmission projects and Renewable Energy Zones, which are modern day power stations.
"In addition, we are providing a $47.5 million to accelerate the development of pumped hydro in the State.
"My focus is set squarely on making sure the families and businesses of NSW have the reliable and affordable energy supply they need and that is the purpose of our plan."
The NSW Government's plan to support jobs will be released in the coming days, he said.
"The mechanisms are now in place to guide future investment in supply, including the NSW Roadmap, and firm commitments have been made for other dispatchable capacity to come into the market over the coming years, as well as new transmission infrastructure, which are expected to more than compensate for any exit of Eraring.
"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.
"We acknowledge this news will be challenging for many of our colleagues, suppliers and the local community. This is only the start of the process, and we commit to consulting with our people, and supporting them, through any potential closure," Mr Calabria said.
The Nature Conservation Council welcomed Origin's early exit from coal-fired power.
It was a sign of the unstoppable momentum of change to cleaner and cheaper energy, according to the Nature Conservation Council.
"Origin's announcement is a ray of hope for leaving a safe climate for our children," said Nature Conservation Council Chief Executive Chris Gambian.
Singlehandedly, this announcement will avoid up to 87 million tonnes of climate pollution. That is more than the annual emissions of 167 countries, including Austria, New Zealand, and Greece.
"Origin's announcement means that over the next three and a half years, NSW's clean energy industry will boom to ensure there is sufficient clean energy generation to continue bringing down power bills."
"There is over $100bn of investment interest in clean wind, solar and batteries in the Hunter Renewable Energy Zone alone."
"We need the NSW and Federal governments to step up and get the batteries, solar and wind farms, and transmission lines up and running by 2025 to ensure a seamless transition."
"NCC welcome's Origin's commitments to provide tailored transition support to its workers, and to invest in new battery and pumped-hydro plants in NSW to provide clean energy on demand."
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John Ellicott
journalist and author
journalist and author
