NSW to suffer if Origin Energy shuts Eraring coal-fired generator in 2025, Centennial CEO says

Have the candles ready if ‘net-zero leader’ Origin sticks with its new plan for closing Eraring — in the view of its main coal provider — because renewables won’t be able to keep the lights on.

NSW will be in “serious trouble” if Origin Energy follows through on its vow to shut the nation’s biggest power station seven years early in 2025, the plant’s largest coal provider claims, because renewable supply won’t be ready to replace it.

Craig Gillard, CEO of Centennial Coal, which has historically delivered half the six million tonnes of coal used by Origin’s Eraring station, said he did not believe the four-turbine Lake Macquarie plant would stop producing electricity in 2025.

“I can tell you, if they come offline in August 2025 taking off 2800 megawatts, NSW will be in serious trouble,” Mr Gillard told The Daily Telegraph. “The renewables won’t be enough to cover that gap.

Eraring supplies about 20 per cent of NSW’s energy needs.

“If I was a betting man I would say it won’t totally shut down,” Mr Gillard said. “Maybe they will drop it back to two units.”

Centennial Coal CEO Craig Gillard. Picture: Supplied

Still, Mr Gillard said Origin was not contracting with Centennial for supply to Eraring beyond that date.

“They are only going to do small contracts because they don’t know what they are doing,” he said.

In February, Origin announced its plan to close Eraring seven years early as part of the publicly-listed company’s plan to “lead Australia’s energy transition towards net zero emissions.”

However, last week at a speech in Sydney, its CEO Frank Calabria indicated that timetable was no longer set in stone.

Mr Calabria indicated that if an exit was delayed because renewables weren’t ready, the company would expect compensation for running “uneconomic plants”.

Mr Gillard said: “I was at that speech delivery and I left there not convinced that (Eraring) was going to close in 2025.

Origin Energy's Eraring power station. Picture: Supplied

“Maybe (Origin) are waiting for some government assistance.”

The day after Mr Calabria’s speech, the South Australian government said AGL would be paid $20 million to prevent the closure of a gas-fired station there. Households and businesses will foot that, via power bills.

In October, the NSW government picked a supplier for the Waratah Super Battery that is meant to fill much of the gap left by Eraring’s closure. Construction is due to start in April next year. The supplier has said it is confident the battery, which is said to cost about $1 billion, will be finished in time.

The closure of the Eraring generator could see power prices spike.

Recently, Centennial has only been supplying about 20 per cent of Eraring’s requirements due to operational problems rumoured to be caused by being unable to get a key piece of equipment from China.

But Mr Gillard revealed the real reasons were “geological” – a seam proved impossible to cut because it was “harder than the concrete in your driveway” – and that a cave containing items of Aboriginal heritage significance had been discovered.

That discovery stopped mining in June – at the peak of chaos in the NSW power market.

“There was a low risk that if we mined under it we would damage it,” Mr Gillard said.

About 200,000 tonnes of coal beneath the cave was left untouched. And the month outage, to relocate away, cost about 350,000 tonnes of supply.