Origin Energy has announced that Lake Macquarie's Eraring power station, the largest coal-fired generator in Australia, could close in 2025, seven years earlier than planned.
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The company informed the energy market regulator of Eraring's intended new closure date on Thursday and told the Australian Stock Exchange when presenting its half-yearly results.
Origin's ASX statement said it would "progress plans" to replace the 2880-megawatt plant with 700MW of battery storage at Eraring.
The company flagged a closure date of 2032 for Eraring in May last year but said on Thursday that "growth in renewable energy challenges Eraring's viability".
Eraring provides about a fifth of NSW's electricity and employs about 230 workers and 200 contractors.
"We have carefully weighed Eraring's future for some time as it has become increasingly clear that the influx of renewables has changed the nature of demand for baseload power, undermining the economics of the plant," Origin chief executive Frank Calabria said in a statement on the company's website.
"We acknowledge that this will be challenging news for our people, suppliers and the local community, and we commit to supporting them through any transition.
It has become increasingly clear that the influx of renewables has changed the nature of demand for baseload power, undermining the economics of the plant.
- Origin Energy CEO Frank Calabria
"While the energy transition brings change, it also presents opportunities for Origin to continue to invest in cleaner, reliable and affordable energy."
The ASX statement said new capacity additions outlined under the NSW government's Electricity Infrastructure Roadmap should "more than cover" the firming capacity of Eraring.
The news comes a week after AGL announced that it would bring forward the closure of Bayswater power station from 2035 to "no later" than 2033 and possibly 2030.
AGL will close Liddell power station next year, and Delta Electricity's Vales Point plant is slated to shut in 2029, meaning the Hunter's four coal-fired generators could all be gone in eight years.
"Potential Eraring closure is a significant step in progressing the decarbonisation of our business and achieving our long-term ambition to be net-zero emissions by 2050," Origin said.
The company said it would focus on retraining and redeploying staff as part of a transition plan.
An Origin spokesperson told the Newcastle Herald that the Eraring decision had been driven by high costs and the growth in renewables and not by changing investor sentiment towards fossil fuels.
She said the plant cost between $200 million and $250 million a year to keep running before the cost of buying coal.
NSW Treasurer and Energy Minister Matt Kean said on Thursday morning that he was "disappointed" with Origin's decision but vowed the state would have a new 700MW "transmission" battery to stabilise electricity supply by 2025.
Lake Macquarie MP Greg Piper said the shock announcement would deliver "far-reaching and major implications" in the Hunter.
"First and foremost, there will be many hundreds of local workers and their families rightfully concerned about their futures this morning. My own son is among them," he said.
"This decision does not impact on Eraring employees alone but those in associated industries, including Centennial Coal, which provides coal to Origin's Eraring operations. This is a day we knew was coming but is now coming way sooner than was thought."
Centennial Coal declined to comment on Thursday.
Mr Piper said Origin executives had confirmed the earlier closure of Eraring would not affect the company's commitment to fund a new sport and recreation centre at Morisset.
"Origin has assured me that it remains entirely committed to staying on the Eraring site to become a renewable energy powerhouse and also remains committed to funding the new sport and recreation centre," he said. "It must also remain committed to dealing with coal legacy issues such as contamination and coal ash as part of the transition process."
Origin said it had set aside $240 million for "restoration and rehabilitation" of the Eraring site.
Mr Piper said the earlier closure would have positive effects on the Lake Macquarie environment.
"Turning the pumps off and stopping the thermal input from the cooling system will see change in the local lake environment, for example, and these issues must be included in transition plans."
The Climate Council's Dr Madeline Taylor said the Eraring decision was more evidence that renewable energy was replacing coal.
"Some of Australia's biggest power companies are not able to compete from a price and policy perspective as the states and territories cash in on a net-zero future, bringing with it cheaper renewable power, economic investments and new clean jobs," she said.
"The newly announced Hunter-Central Coast Renewable Energy Zone is set to provide 100 terawatt hours of power by the mid-2020s, which is almost double the generation of NSW's entire coal fleet.
"The new Hunter REZ is just one of the state's four proposed REZs.
"Coal is not going to cut it anymore when we have cheap and reliable renewable energy and storage that's already powering over a third of Australia's largest electricity grid and providing almost 25 percent of NSW's power."
"It's increased storage that we need, not more investment in expensive electricity generation stemming from gas, which our carbon budget cannot afford and may leave us with stranded assets."
Climate Energy Finance analyst Tim Buckley said the AGL and Origin announcements underscored the "rapid technological, financial and policy changes coming globally with the transition to green energy, which are accelerating and inevitable".
"It is beyond time Australia actually had a government focused on planning for the transition to green energy rather than denying it," Mr Buckley said.
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