Eraring Power Station closure: Matt Kean’s office undertook secret modelling project

A government department undertook a secret eight-month modelling project into a Lake Macquarie power station before its owners announced its early closure last week.

Energy minister Matt Kean’s office undertook a secret eight-month modelling exercise to study the closure of the Eraring Power Station and knocked back requests from the plant’s operators for help to keep it open before its owners announced its early shut down last week.

While it is understood that jobs and prices were factored into the overall conclusions of the project, modelling by the Australian Energy Market Operator as part of the government’s “Project Phoenix” only looked at whether it would be possible to meet the shortfall of the planned 2025 closure.

The Daily Telegraph understands the project has been declared “complete” by Mr Kean’s department despite major question marks hanging over the reliability of the 700MW battery Origin Energy plans to put in its place.

The Eraring Power Station. Picture: Liam Driver

The Liddell coal fired power station is due to be closed. Picture: David Swift

The Eraring plant, which generates more than 20 per cent of NSW’s electricity, is Australia’s largest power plant and had originally been scheduled to close in 2032.

However, last week Origin declared that it would shut its doors in just three years time, leaving the grid exposed to electricity shortfalls and consumers to higher prices.

The closure of Eraring is the latest coal fired power plant to announce its closure and energy market watchers have noted that since the 2017 mothballing of Victoria’s Hazelwood plant ensuring Australia has enough baseload power has become a juggling act.

NSW Treasurer and Energy Minister Matt Kean. Picture: NCA NewsWire / Jeremy Piper

Eraring’s shutdown will happen less than two years after the proposed closure by AGL of NSW’s Liddell plant, leaving the entire national grid more reliant on wind and solar as well as gas peaking plants and batteries.

While the AEMO has said that a combination of battery, gas, and pumped hydro would be able to fill the gap left by Eraring, federal energy minister Angus Taylor has derided the battery scheme as “delusional”.

On Sunday night Mr Kean conceded that Origin had sought support from the NSW government to extend the life cycle of the plant but that this was ultimately refused as he had “considered a number of options that had to weigh up the impact they would have on taxpayers (and) electricity users.”

“The decision was taken on the option that was the best for the people of NSW,” Mr Kean said, despite also claiming that he was “disappointed” by Origin’s decision.

Mr Kean added that work his department had done with the AEMO to “free up” transmission capability would allow existing power assets to fill the gap even with the loss of so much capacity.

On Tuesday Mr Kean told The Daily Telegraph that “the NSW Government and Origin Energy had discussions over a number of months around the closure of Eraring Power Station.”

“The NSW Government has released a comprehensive plan to build new infrastructure to replace Eraring, to keep the lights on and put downward pressure on prices.”