Delta Electricity flags extending lifespan of coal power station in bet on slower transition Delta Electrcity looks to extend lifespan of NSW coal power station

The energy group is positioning to capitalise should Australia’s transition away from coal take longer than currently expected and renewable development continues to struggle.

Delta Electricity may keep one of NSW’s coal power stations open for a further four years, as the Czech-owned group positions itself to capitalise should Australia‘s transition away from fossil fuels take longer than expected.

The 1320-megawatt Vales Point coal power station in the Central Coast was set to be retired in 2029, but Delta Electricity said on Friday it has informed the Australian Energy Market Operator that an assessment has determined it could remain open for a further four years.

David Morris, Delta Electricity’s interim chief executive said the additional lifespan reflects the company’s rigorous maintenance.

“This has included major outages every four years on each unit to replace critical plant elements, implementing capital upgrades and conducting extensive maintenance. The plant continues to provide high levels of availability to the system and is expected to continue to do so through to 2033,” said Mr Morris.

The move to possibly extend the lifespan of Vales Point would make it one of the last remaining coal power stations in NSW.

The move had been foreshadowed in comments from Delta Electricity’s incoming chief executive Richard Wrightson who in June said Vales Point was viable and the market conditions showed a desperate need for coal powered electricity as Australia struggles to develop renewable energy and storage facilities.

Mr Wrightson will begin his term as chief executive of Delta Electricity in late August.

While not mentioned, the delay marks Delta Electricity’s positioning that it can profit from a slower-than-anticipated energy transition. Much of NSW’s coal power stations are expected to be retired by the end of the decade as they struggle to financially compete with a rapid influx of renewable energy, which would see the likes of Vales Point suffer significant losses during sunny and windy days.

However, Australia’s renewable energy build-out is struggling to keep pace with the retirement of coal, a trend that would be exacerbated should Origin Energy mothball its dominant Eraring coal power station in 2025.

If Australia continues to struggle to build enough storage capacity particularly, Delta Electricity could profit from the significant volatility in the wholesale market as prices surge during evenings or so-called renewable energy droughts.

Delta Electricity‘s move, however, could be upended should Eraring’s closure date change.

There are growing concerns about the impact of Eraring’s closure, as the coal power station provides about 25 per cent of NSW’s energy needs.

NSW energy minister Penny Sharpe earlier this year received a briefing that said the closure of Eraring could lead to a shortfall of 262 MW and 450 MW in firming capacity in the summer of 2025-26.

The NSW state government has said it will consider independent reports into the impact of the closure of Eraring before making a decision on whether to attempt to strike a deal with Origin to prolong the lifespan of the coal power plant.

Victoria used a so-called closure contract to extend the lifespan of EnergyAustralia’s Yallourn coal power station. The terms of that deal have never been publicly disclosed.

The independent report is expected to be delivered early next month, while AEMO will also issue its own report later that month.

Should both conclude Eraring must stay open to guarantee the NSW grid, it would reduce the threat of wholesale price volatility and hinder the potential returns of the smaller Vales Point.

Either way, the extension will be warmly welcomed by Delta Electricity’s 500-odd employees and proponents of fossil fuels, which have warned Australia’s rush to renewable energy risks price rises and even black-outs.

Fossil fuel proponents have seized on recent increases to household and business bills as justification for a slower transition.

But it will be jeered by opponents of fossil fuels, who insist Australia must be more aggressive if it is to meet its emission reduction targets.

Central to Australia’s net zero emissions by 2050 plan is a target to drastically transition its electricity generation composition.

Nearly two-thirds of Australia’s electricity comes from coal, but Labor earlier this year passed legislation setting a target to have more than 80 per cent of supply come from zero emission sources.