The Hunter's peak business advocacy group has urged the state government to extend the operating life of Eraring power station beyond mid-2025 to shore up energy reliability during the energy transition.
It follows a recommendation from the government-commissioned O'Reilly Review that it strike a deal with Origin Energy to keep the 2880 megawatt plan running beyond the scheduled closure date.
The Minns government is expected to formally announce its intention regarding the future of Eraring in the coming days.
"There has been immense trepidation in the business community as traditional energy assets are turned off, with no renewables arriving to replace them," Business Hunter acting chief executive Sheena Martin said.
"Shortfall in the marketplace drives pricing increases. We know energy bills are an acute source of pain for business, with double digit cost increases directly quelling growth and expansion plans, or in more extreme instances, impacting their ability to maintain current operations
"We must also be live to our future energy demand curve, which is imminently expected to hike as we build new industries in wind, green hydrogen, battery manufacturing and more, all hungry for vast amounts of energy."
Origin Energy chief executive Frank Calabria said last week that, while Eraring remained on track to close in 2025, the company would continue to assess market conditions before making a final decision.
It is likely that government intervention to keep the plant open would cost between $200 million and $400 million a year. However, the government has little option given the slow pace of the clean energy roll-out
"If the Eraring power station closes as planned in 2025 it would be catastrophic for consumers and destabilise our entire electricity grid," Institute of Public Affairs executive director Scott Hargreaves said.
The Australian Energy Regulator found the closure of Liddell power station earlier this year eliminated surplus capacity from the grid. It also resulted in a spike in wholesale prices and reduced grid reliability.
"Liddell was the line in the sand moment for the nation's energy grid as any further closures of stations like Eraring or Bayswater would mean energy security would be terminally comprised, with households and businesses paying the cost in higher prices and reduced reliability," Mr Hargreaves said.
But NSW Nature Conservation Policy and Advocacy director Brad Smith warned the state would fail to meet already weak climate targets if the decision to subsidise Australia's biggest coal plant goes ahead.
"This recommendation is an absolute disaster for the climate, energy affordability and the credibility of the NSW government when it comes to emissions reductions," Dr Smith said.
"This is despite mounting evidence that such an extension is unnecessary, will cost consumers more, and make it impossible for us to meet our emissions targets."
Dr Smith said it appeared that the government was determined to "forge ahead with the absurd waste of taxpayer money", despite recent reports that demonstrated that the Eraring could be closed on schedule.
"NSW climate targets rely heavily on closing coal, and for good reason - it's the largest source of climate pollution, and the easiest to phase out.
"We cannot imagine a scenario where the NSW government reaches its own inadequate climate targets if they choose to extend the life of Eraring by even one or two years"
It was a sentiment shared by Tim Buckley, who is the director of the think tank Climate Energy Finance.
"Leaked reports today that the NSW Electricity Supply and Reliability Review will recommend taxpayer subsidies to extend the life of Eraring coal power station beyond its closure date phased over 2025 would be a massive retrograde step when the exact opposite is needed - implementation of an accelerated transition to firmed renewables, Dr Buckley, who wrote the The Lights will Stay On report, said.
"There is no case to delay the planned closure of Eraring and pay its operator the estimated $200-400m in public subsidies to do so. This money should be invested in NSW' energy transition.
"We call on Energy Minister Penny Sharpe to flood the market with distributed energy and infill utility scale renewables firmed by accelerated deployment of batteries, to drive more capacity. This will ensure supply and reduce wholesale electricity prices, putting permanent downward pressure on energy bills whilst also better aligning our decarbonisation pathway with the climate science.
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