Minns warns NSW will lose support for green energy transition if power prices rise

The Premier has warned the NSW public will lose support for the renewable energy transition if the closure of Eraring power station results in blackouts and skyrocketing power prices.

Premier Chris Minns has warned the NSW public will lose support for the renewable energy transition if the closure of Eraring power station results in blackouts and skyrocketing power prices.

His comments come after the independent Australian Energy Market Operator released a dire warning in its most recent report to state and federal governments on Tuesday.

The report found delays to renewable energy projects and the looming closure of the Eraring power station have driven up the risk of blackouts across NSW over the next three years.

Battery projects designed to replace Eraring will also take longer than expected to come online, and there will be a greater than expected demand in Sydney, Newcastle and Wollongong at “times of summer supply scarcity”.

In a response to the report, Mr Minns said on Tuesday, withdrawing the amount of energy from the market currently supplied by Eraring would lead to “an increase in prices”.

Premier Chris Minns is locked in talks with Origin to keep Eraring operating longer than planned.

“Nothing will extinguish community and popular support for this energy transition than a massive power price spike, resulting in people not being able to pay their power bills,” he said.

“Consumers in NSW can’t afford it, not when you’ve got interest payments ballooning, not with inflation through the roof, not with power prices already increasing over the last few years.

“We want to keep people on this journey. We’re big believers in the energy transition, but it’s go to be done on a reasonable timetable without massive cost pressures on consumers.”

The new report will increase pressure on the Minns government to finalise a deal with Origin Energy to keep Eraring open longer than its planned closure date in 2025.

Reliability gaps have “increased NSW between 2024-25 and 2027-28 due to advised delays to previously considered battery projects and revised assumptions for demand allocation,” AEMO warned in its report.

There is a higher risk of power outages between 2025-26 and 2027-28 than forecast last year, amid the closure of Eraring.

Delays to a number of transmission projects in NSW have also increased “reliability risks”.

Stage 1 of Transgrid’s “Project EnergyConnect” will take three months longer than expected, and stage 2 has been delayed by a year.

In total, the interconnected between NSW and South Australia will enable 950 megawatts of transfer capacity.

Origin wants to close Eraring by 2025. A report to the NSW government last year warned that could lead to blackouts because alternatives will not be ready in time. Picture: Bloomberg

Another transmission development, the Central West Orana Renewable Energy Zone Link, has also been delayed by more than a year – to August of 2028.

The AEMO report forecast a potential “reliability gap” in NSW of 695MW in 2026-27, and 595MW in 2027-28 (compared with the “reliability standard”).

An independent report released by Energy Minister Penny Sharpe last year warned of price spikes and blackouts if Eraring closes in 2025 as planned.

Energy Minister Penny Sharpe has refused to say how much the NSW government will pay to keep Eraring open longer. Picture: NCA NewsWire

The Minns government has since been locked in negotiations with Origin to keep the power station operating until renewables projects are ready to pick up the slack.

Ms Sharpe has repeatedly refused to say how much NSW is willing to pay Origin in exchange for keeping the plant open longer, but a clean energy think tank in March estimated it could cost as much as $150 million per year.

Ms Sharpe said the government “always carefully considers analysis by the energy market operator”. 

The Eraring Power Station, in Lake Macquarie, is Australia’s largest powers station. Picture: Bloomberg

“We are engaging with Origin on its plans for Eraring Power Station and will not comment while this process is ongoing,” she said.

Grattan Institute Energy Program Director Tony Wood said that paying to keep Eraring firing would be “money well spent”.

“If you’re going to take out insurance, take out insurance,” he said.

“If we turns out we didn’t need it, it’s fine.”

He said he did not think the government was trying to keep coal-fired power stations “open just for the sake of it”.

AEMO CEO Daniel Westerman said the report’s call for more investment to manage reliability risks from retiring coal plants.

“While new generation and storage capacity continues to increase, project development and commissioning delays are impacting reliability throughout the horizon,” he said.

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