Origin Energy has brought forward plans to close Australia’s largest coal-fired power plant seven years early.
The energy company announced on Monday it would potentially retire Eraring Power Station, north of Sydney on the shores of Lake Macquarie, in August, 2025, ahead of its previous target of 2032.
Origin CEO Frank Calabria said the company’s decision reflects “rapidly changing conditions” in the energy market amid moves towards cleaner energy.
“Australia’s energy market today is very different to the one when Eraring was brought online in the early 1980s,” he 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.”
Origin intends to use the Eraring site, where 500 people work, to install a large-scale battery to enable it to back the market’s move to renewables.
Energy Minister Angus Taylor said the decision to bring forward the closure is “bitterly disappointing” for the workers, local community and energy users.
“This announcement is a commercial decision and Origin has chosen to provide the minimum 3.5-years’ notice,” he said.
“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.”
Mr Taylor said the sudden early closure of the 2880MW generator will leave a considerable gap in reliable generation in the National Electricity Market, representing more than a fifth of NSW generation output.
“This risks higher prices, like the 85 per cent increase we saw after the closure of the Hazelwood Power Station, and a less reliable grid,” he said.
Closure without like-for-like replacement put affordability and reliability at risk, Mr Taylor said.
The government will work with its NSW counterpart and private industry to ensure there is appropriate replacement, he added.
Mr Taylor also said the government expects Origin to deliver on its commitment to do everything it can to support workers and the local community through this challenging period.
“It is incumbent on energy companies to step up and deliver like-for-like replacement capacity. They owe this to their customers as providers of an essential service,” he said.
“With only short window until closure, energy companies need to back their announcements and make clear commitments to replacement projects by June 2023.”
The Mining and Energy Union said hundreds of workers were “blindsided” by Origin’s announcement, which came as they released in their profit results.
The union’s Robxjmtzywin Williams said it’s seeking urgent meetings with Origin to understand its plans and put in measures to support the 500 workers, including permanent employees and contractors.
“For the many Lake Macquarie and Hunter Valley families that rely on the Eraring power station for their livelihoods, today’s announcement creates uncertainty for the future,” he said.
“Origin has told workers that having made today’s announcement they will now engage in consultation. We urge them to engage in genuine two-way consultation with workers about the future and not just present them with decisions.”
Mr Williams said as well as measures to support workers at the company level, an industry plan was needed to prevent forced redundancies, create job transfer opportunities for skilled energy workers and investment in regions that have powered Australia for decades.
NSW Energy Minister Matt Kean said he was “disappointed” by the announcement but the state’s energy supply would remain reliable and affordable.
Mr Kean said the state government will work with industry 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.
“The Australian Energy Market Operator 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,” he said.
The NSW government will also accelerate the delivery of new supply to keep downward pressure on electricity prices, he added.
Elsewhere, $26 billion energy giant Woodside Petroleum was trading at its highest price since the March 2020 coronavirus crash as strong gas prices lifted it to a record earnings result.
Investors cheered the Western Australian company on Thursday as it swung from a hefty loss to a $2.75 billion profit for 2021, even though production activity was disrupted late in the year due to poor weather and maintenance requirements
Woodside said it managed to fetch an average oil price of $U60.30 a barrel over the 12 months – 86 per cent higher than it achieved during a Covid-riddled 2020.
This helped boost its share price more than 4.5 per cent higher in Thursday’s ASX trade to a near two-year peak of $27.88.
Woodside will also pay a final dividend of $US1.05 to shareholders, sharply higher than last year’s US12c dividend.
