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Origin accelerating Eraring’s exit from coal-fired generation 

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Origin Energy Limited (Origin) will accelerate its exit from coal-fired power generation after announcing its plan to prematurely shut the Eraring plant.

The company informed the Australian Energy Market Operator (AEMO) on Thursday 17 February of its intention to close the Lake Macquarie facility in August 2025 – at the end of the required three-and-a-half-year notice period.

Origin had previously targeted closure of the 2880 MW black coal plant by the end of its technical life in 2032. 

“Our proposed departure reflects the continuing, rapid transition of the National Electricity Market (NEM) as we move to cleaner sources of energy,” CEO Frank Calabria said.

“Australia’s energy market today is very different to the one when Eraring was brought online in the early 1980.

“And, the reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries. 

“To enable Origin to support the market’s continued transition to renewables, we intend to utilise the Eraring site beyond any retirement of the coal-fired power station, with plans to install a large-scale battery. 

“We have carefully weighed Eraring’s future for some time, which has included extensive consultation with the NSW Government to identify what options might exist for the future of the plant.

“Eraring is a high-quality asset, run by a skilled and dedicated team, that has worked tirelessly to supply reliable and affordable energy in NSW for four decades.

“However, it has become increasingly clear over the past few years that the influx of renewables has changed the nature of demand for baseload power. 

 “At the same time, the cost of renewable energy and battery storage is increasingly competitive, and the penetration of renewables is growing and changing the shape of wholesale electricity prices, which means our cost of energy is expected to be more economical through a combination of renewables, storage and Origin’s fleet of peaking power stations.”

But, Origin’s decision has earned the ire of federal Minister for Industry, Energy and Emissions Reduction Angus Taylor.

“It’s bitterly disappointing for all energy users – from households to small businesses to heavy industry – who rely on affordable, reliable energy to prosper,” he said.

“It is equally upsetting for the 400 workers and communities in the Lake Macquarie region.

“The government expects Origin to deliver on its commitment to do everything it can to support workers and the local community through this challenging period.

“The early and sudden closure of this generator will leave a considerable gap in reliable generation in the NEM, representing more than 20% of NSW generation output.

“This risks higher prices, like the 85% increase we saw after the closure of the Hazelwood Power Station, and a less reliable grid.

“The Morrison government has been consistent and clear.

“On-demand reliable power such as coal, gas and pumped-hydro is needed to balance the record levels of intermittent forms of energy such as wind and solar.

“Dispatchable, on-demand capacity is critical to keep prices low and the grid reliable.

“Closure without like-for-like replacement puts affordability and reliability at risk.

“It is incumbent on energy companies to step up and deliver like-for-like replacement capacity.

“They owe this to their customers as providers of an essential service.

“With only short window until closure, energy companies need to back their announcements and make clear commitments to replacement projects by June 2023.”

Mr Taylor said the Morrison government boasted a strong track record of dealing with these issues.

“We will work with the NSW Government and private sector to make sure there is appropriate replacement,” he added.

“Today’s announcement means projects like the Hunter Power Project are even more important than they already were.”

Mr Calabria admitted there would be no change to Eraring operations.

“Site staff, off-site contractors and suppliers will continue to be required, as long as the service is still required by the power station,” he said.

“Origin will consult with its Eraring workforce about the timing of any potential retirement, as well as providing a generous support package during any transition period.

“This will include re-skilling, career support and redeployment into new roles, where possible.

“Origin intends to engage with governments and the local community to determine the most appropriate transition planning for any eventual closure.

“This includes tailored transitional support for employees, continuing with current community commitments, sponsorship and donations out to 2032, and the establishment of a community fund.”

Any retirement of Eraring Power Station in mid-2025 is expected to remove a significant proportion of Origin’s Scope 1 emissions, delivering on the company’s commitment to help achieve the goals of the Paris Agreement, well ahead of 2030.

Mr Calabria said Origin remained committed to updating its emissions reduction targets consistent with a 1.5°C pathway later this year. 

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