Alinta interested in buying coal-fired Eraring before its closure, but it’s considered a long shot

Alinta Energy is interested in purchasing NSW’s largest coal-fired power station, but it will need to overcome a long list of obstacles.

The Eraring Power Station is New South Wales' largest coal-fired power generator. Picture: Hollie Adams

Alinta Energy is interested in purchasing NSW’s largest coal generator as it moves to capitalise on concern about the state’s energy needs.

Origin Energy plans to close the Eraring coal-fired power station in 2025, But The Australian revealed on Tuesday that an independent report has urged the NSW government to strike a deal with the retailer to safeguard reliability and prevent price increases as the country struggles to build enough renewables to compensate for the retirement of fossil fuels.

Formal negotiations between Origin and the NSW government have yet to begin, but Alinta has quietly expressed interest in the 2880MW coal-fired plant that has a technical lifespan until 2032.

An Origin spokeswoman said the retailer valued Eraring. “Eraring is a highly valuable site to Origin with strong transmission links and we are currently constructing a large-scale battery onsite as part of our plans to accelerate renewables and cleaner energy in our portfolio,” the spokeswoman said in a statement.

“We continue to engage with the market operator, the NSW government, our people, and the local community regarding plans for Eraring’s closure.”

A spokesman for Alinta declined to comment. Sources familiar with the interest, however, cautioned that even if a formal bid were to materialise, it was a long shot.

Origin has begun transitioning the site of Eraring and last year gave the green light to a $600m large-scale battery at the site that could be expanded. A sale to Alinta would throw into doubt that investment, which is a cornerstone of Origin’s transition plan.

There is significant uncertainty about whether Origin’s prospective new owners and the government would even approve a sale.

Australian authorities are mulling whether to endorse Brookfield’s $18.7bn deal for Origin, and the Canadian private equity giant’s plan to supercharge the transition away from coal.

Alinta is owned by Hong Kong-listed Chow Tai Fook Enterprises and a sale of a strategic asset would likely draw attention from authorities.

The NSW government must move quickly to decide about the future of Eraring, and sources expect the government would have to strike a deal with Origin before the end of the year.

Pressure will intensify next week when the Australian Energy Market Operator is expected to heighten its warnings about Australia’s energy transition

AEMO last year said NSW would experience shortfalls in generation capacity by 2025 when Eraring was retired.

Moves by Victoria on Monday to guarantee AGL Energy’s Loy Yang A coal power station could be a template for NSW.

The Victoria-AGL deal means Australia’s second most populous state will share the financial risk of the coal-fired power station becoming uneconomical. Critically, however, AGL said it did not expect Loy Yang to be unprofitable until 2035.

That is in contrast to Origin, which accelerated the closure of Eraring to 2025 from its previous retirement date of 2032 after deeming it unprofitable.

If Alinta overcomes the long list of obstacles, a deal to prolong Eraring without state funds would be appealing to some Australian officials.

The NSW government is unlikely to want to endure any voter hostility from paying public funds to support coal, even as Australia struggles to build enough renewable energy generation sources to replace coal.

Originally published as Alinta interested in buying coal-fired Eraring before its closure, but it’s considered a long shot