Eraring closure risks blackouts, says regulator, with extension floated
NSW risks power outages unless it speeds up infrastructure development or keeps using the Eraring power plant, says the national energy operator – with businesses under threat of cost blowouts.
NSW Premier Chris Minns says he’s open to again extending the life of the Eraring coal-fired power plant, hedging his bet on the clean energy transition, as the federal energy operator warns of potential blackouts in NSW.
The Australian Energy Market Operator’s 2025 Transition Plan for System Security, released on Monday, warns of potential blackouts should Eraring close as planned in August 2027.
AEMO chief executive Daniel Westerman said synchronous condensers – large motor converters that stabilise the energy grid – had to be developed before Eraring’s closure to safely transition away from coal-fired power.
Mr Minns on Monday suggested Eraring could continue to act as a “safety net”, saying he would continue negotiations with its operator Origin Energy.
“We’re not necessarily opposed to a conversation with them about it,” said Mr Minns, whose government agreed with Origin last year to delay the closure of the plant to 2027.
“I’m not going to enter into a commercial negotiation in public, not because I’m trying to be coy or keep it from the public, but (if) we’re going to negotiate with the private firm (then) we’d do it around the negotiating table.
“Nothing will pull community support for this energy transition quicker than reliability and cost spiking even further than it is today, and I’m acutely aware of that.
“It’s been a huge transition in a short space of time. We expect that to be sped up in the years ahead, but if we can pad it out a little bit and give us a little bit of buffer while we pursue this investment, then it means that if there is a delay or a bit of a blowout when it comes to renewable energy or transmission lines, it gives us some safety net.”
Origin said it “has always acted responsibly” and was considering all options.
“There are a range of scenarios Origin needs to consider. Our base scenario is unchanged, and it is up to Origin to make a good decision, which we’ll do with our customers and energy security for the people of NSW in mind,” a company spokeswoman said.
“Origin has always acted responsibly in this regard, and the community should have confidence we will continue to do so.”
Eraring is the country’s largest coal-fired power plant, supplying up to a quarter of the power in NSW. Provisions in the government’s agreement with Origin mean the plant could remain operational until April 2029 – at the company’s discretion.
The Minns government this year introduced revisions to its infrastructure laws to speed up synchronous condenser development by a purported 12 to 18 months, and Mr Westerman said it needed to remain a priority.
“These coal plants are just getting old. They are going to retire. If they’re not withdrawn, they’re going to break. And we need to be ready for that,” he said.
“AEMO has been flagging the need for investment in these big spinning machines in each year since 2021. The currently installed date of those synchronous condensers is after the retirement date of Eraring as it’s currently announced.”
Federal opposition resources spokesperson Susan McDonald argued coal-fired power would remain in the energy mix “ for much longer than any of the naysayers are saying”.
“It’s extraordinary that for such an energy rich nation … we’re having an energy crisis,” she told Sky News.
“We are rushing the grid towards an energy market that doesn’t yet exist. It’s not stable.”
Cherie Lyden is the founder of Wholegreen Bakery, an award-winning Coeliac Accredited bakehouse in the inner-Sydney suburb of Alexandria.
Ms Lyden hired an energy broker in 2020, facing rising bills. The final weeks of each contract are fraught with anxiety, she said, fearing the next deal would come with far higher costs.
“About a year ago, we went into a new contract and it almost doubled in price,” she said. “The next time that contract’s up in five years, it could be triple the price.”
Ms Lyden said she could not afford to pay inordinate electricity prices, as the price of produce was already driving her to the wall: “When everything else seems to be going up around you, your margins get smaller and smaller.”
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