James O’Doherty: Keeping the lights on is the number one priority
New Environment Minister Penny Sharp is busy juggling four major portfolios. But her number-one priority must be to guarantee electricity supply, writes James O’Doherty.
Opinion
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Since being sworn into office, NSW Energy Minister Penny Sharpe has had more than 380 requests for meetings.
The Labor veteran is still working through her jam-packed dance card amid a diary packed with briefings across her four portfolios. Sharpe also has responsibility for Climate Change, Environment and Heritage.
Among her heavy workload, Sharpe counts her responsibility for keeping the lights on as her most important role.
With Australia’s largest power station set to close as early as 30 months from now, the size of that challenge cannot be overstated.
Friday’s final closure of the Liddell Power Station is just a taste of the problem facing the Minns government when Origin’s Eraring power station shuts down as early as August 2025.
This column can reveal that Sharpe has already spoken with Origin CEO Frank Calabria for an introductory ‘meet and greet’.
Eraring’s looming closure was not discussed in detail at that meeting, but the new government is already in talks about potentially stepping in to keep the coal-fired power station open longer, to allow enough time for replacement generation to come online.
Treasurer Daniel Mookhey has held talks with Origin’s potential owner Brookfield Asset Management and its chair Mark Carney.
Sharpe has also been part of those discussions.
The government remains in “open dialogue” about what, if anything, it will do to extend Eraring’s life.
Sharpe admits that replacing the 2.88 gigawatt nameplate capacity of Eraring when the station powers down is “one of the biggest challenges this government will face”.
“We’re doing a complicated transition in a very quick period of time, there’s going to be bumps across the road and the challenge is to try to make that as smooth as possible,” she says.
The stakes could not be higher.
According to departmental advice given to the minister, NSW faces “high prices, reliability risks and (negative) impacts on the economy” if ageing coal-fired power stations aren’t replaced before they retire.
Bureaucrats insist that renewable energy like wind and solar — backed up by new battery storage — will be the cheapest way to replace the baseload power currently coming from coal.
But that maths only works if new projects already committed to are finished when Eraring generates its last kilowatt.
According to departmental briefings provided to the government, there will be enough capacity to replace Eraring when it closes — but only if every energy project currently committed to is completed on time.
With major initiatives like Snowy 2.0 and the Kurri Kurri renewable gas plant beset by delays, that prospect is looking increasingly optimistic, even heroic.
In fact, the government won’t even know until the end of this year whether the projects currently under way will be enough to replace Eraring if it closes in August 2025.
The Grattan Institute’s energy program director Tony Wood says there are a number of projects that can replace Eraring’s power supply “but they’re not locked in yet”.
He believes neither of Eraring’s potential owners will shut the power station if replacements don’t exist, but contingencies should be in place.
Premier Chris Minns on Thursday spoke of “progressing the renewable energy revolution in NSW”.
But, importantly, he acknowledged that the transition to renewables is “not going to happen and will not work if we don’t keep the lights on as we manage that transition”.
In other words, renewable energy will be great when it works but we need to make sure we don’t run out of power before that happens.
New Liberal leader Mark Speakman is taking a similar stance.
On Thursday, he emphasised the Liberal Party was committed to an “orderly transition to renewable energy” but said in the short-term reliability must come first.
“In the next couple of years, reliability is the top priority,” he said.
This is a welcome shift in tone from former Energy Minister Matt Kean, who would shout down any suggestions of a looming energy shortfall when coal-fired power stations close.
At one point during the election campaign, Kean refused to rule out stepping in to keep Eraring open but then backed down (after former premier Dominic Perrottet said it was “not part” of the Coalition government’s plan).
Options were provided to the previous government which would have kept Eraring firing for longer.
In one proposal, revealed by The Daily Telegraph last year, Origin would have kept two of Eraring’s four generators running until 2028 while building up to 800 megawatts of replacement capacity, in a move to reduce risks of the entire plant closing early.
The secret proposal dubbed “Project Emu” was made to the NSW government last year but never went ahead.
After being freed from Kean’s single-eyed belief in renewable power sources that haven’t been built yet, the Opposition now has the option of a more sensible approach.
Whoever takes on the Opposition energy portfolio should have one job — ensuring that the government comes good on keeping Eraring open until replacement capacity can be found, regardless of where that power comes from.
Got a news tip? Email james.odoherty@news.com.au
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