A deal between Origin Energy and the NSW Government will delay the closure of Australia’s largest coal-fired power station by two years.
Eraring Power Station at Lake Macquarie was due to close in 2025 as part of the state’s move towards renewable energy.
Origin has agreed to extend operations at Eraring to August 19, 2027.
Eraring employees will be provided with a transition support package by Origin through career transition support, re-skilling and redeployment where possible.
A $5 million fund to support communities affected by the closure of the plan has been set up.
Origin has committed to delivering six TWh of electricity during the two years of extension and may receive compensation from the government if the plant makes a loss.
If Eraing operations are profitable during that period, Origin will pay the NSW Government 20 per cent of the agreed profit, which is capped at $40 million per annum.
“We believe this agreement strikes the right balance, with an extension to operations enabling Eraring to continue supporting the security of electricity supply in New South Wales through the energy transition, while making compensation available to Origin in the event economic conditions for the plant are challenging,” Origin CEO Frank Calabria said.
“This agreement supports Eraring to continue to play an important role in maintaining reliable power for businesses and households through a period in which there remains considerable uncertainty about the volume and timing of new renewables, transmission and firming infrastructure coming online,” he said.
“Importantly, today we can give our Eraring employees, our suppliers and the local community greater certainty around the future of the plant as we transition towards its retirement.”
The electricity company and government say the operations remain consistent with meeting Origins 2023 emissions reduction targets and the long-term goal of net zero emissions by 2050.
The Australian Conservation Foundation’s climate policy advisor Annika Reynolds said it was a huge step backward for climate action in Australia.
“The Minns government must speed up the renewables transition and not fall back on unreliable coal clunkers like Eraring,” Reynolds said.
The foundation estimates the power station contributed almost three per cent of Australia’s total greenhouse gas emissions.
The decision comes after the Electricity Supply and Reliability Check Up report recommended extending the life of the power station in September.
