The energy industry has responded to Origin Energy’s proposal to close the coal-fired Eraring Power Station in 2025, seven years earlier than originally planned.
The power station is the largest of its kind in Australia, and its early retirement reflects Origin’s goal to transition to a lower-cost, cleaner energy future.
The station’s early retirement has spurred concerns about the implications for its employees and for the gap it will create in energy generation.
The future of NSW energy
New South Wales Minister for Energy, Matt Kean, said ensuring affordable and reliable electricity for the state and supporting jobs were the focus of the State Government’s response to the announcement.
“The planned closure of Eraring is especially tough for its workers, their families and local communities, many of whom have helped power New South Wales for decades, and my expectation is that Origin does the right thing by its workers,” Mr Kean said.
“Origin raised the possibility of this closure a number of months ago and, with advice from the Australian Energy Market Operator (AEMO), we have developed a comprehensive plan to ensure that New South Wales has reliable and affordable electricity.”
The New South Wales Government plans to work with industry partners to install the Waratah Super Battery by 2025 to release grid capacity so Sydney, Newcastle and Wollongong consumers can access more energy from existing electricity generation.
“AEMO has advised that this additional transmission capacity will give the state’s consumers access to enough existing electricity generation to meet the Energy Security Target at the time Eraring closes,” Mr Kean said.
Uncertainty for power station workers
Mining Energy Union (MEU) Northern Mining and New South Wales Energy Acting District President, Robin Williams, said the union was seeking urgent meetings with Origin to understand the company’s plans and put measures in place to support the workforce of around 500 people, including permanent employees and contractors.
“Hundreds of local workers have been blindsided by Origin’s announcement that the power station could close in 2025, not 2032,” Mr Williams said.
“For the many Lake Macquarie and Hunter Valley families that rely on the Eraring power station for their livelihoods, the announcement creates uncertainty for the future.
“Origin has told workers that having made the announcement, they will now engage in consultation. We urge them to engage in genuine two-way consultation with workers about the future and not just present them with decisions.
“In addition to measures to support workers at the company level, we need an industry plan to prevent forced redundancies, create job transfer opportunities for skilled energy workers and investment in the regions that have powered Australia for decades.”
Dr Amanda Cahill, CEO of The Next Economy, a not-for-profit that works with business, local government and the community to manage the transition from fossil fuels to clean new industries, said, “Early closure announcements like this are becoming increasingly common. We need to do more to support affected workers and communities years before any closures happen.
“We need to make sure workers have opportunities to retrain for new jobs or be redeployed to other plants.
“Communities need support to diversify their economic opportunities and attract new investment and industries that can be powered by renewable energy. All levels of government have a responsibility to manage these changes if regions are to prosper into the future.”
Phasing-out coal-fired power plants
The early retirement of Eraring can be seen as representative of a larger shift to phase out emissions-heavy energy sources.
Australia Institute Climate and Energy Program Director, Richie Merzian, said, “The Eraring power station closure shows coal power is finding it increasingly difficult to compete in the electricity market.
“These decisions are entirely economic and the closures inevitable. Rather than be taken by surprise by ad-hoc announcements such as this and AGL’s Loy Yang announcement last week, Australia needs to be prepared.
“There are thousands of workers in Australian coal-fired power stations. They deserve certainty. Australian policymakers need to be planning to look after communities and workers in coal power regions, rather than selling false hope by trying to prop up a dying industry.
“Renewable energy is here right now. Recently, over $100 billion in clean energy projects were proposed for the Hunter-Central Coast Renewable Energy Zone.
“The Energy Security Board (ESB) could have initiated this planned approach at a national level. Unfortunately, it has chosen to prop up coal instead of delivering on its mandate, which was to design the future national electricity market to be secure and reliable without coal.”
The need for a national plan
For some, the closure of Eraring exposes a lack of federal planning and foresight to transition Australia to a cleaner energy future.
Electrical Trades Union (ETU) assistant National Secretary, Michael Wright, said the announcement demonstrated a Federal Government failure to plan for the economic security of the workforce and community.
“Twelve coal-fired power stations have already closed in the last decade, but Scott Morrison keeps acting like everything is fine. Where is the regional transition program?” Mr Wright said.
“A responsible government would look at the shift to renewable energy generation and storage and understand that it would shift the economics of the power industry.
“A responsible government would be taking the opportunity to invest in the communities that are going to be hit hardest.”
Federal Minister for Industry, Energy and Emissions reduction, Angus Taylor, said that Origin’s decision to close the power station early was “bitterly disappointing,” and that the Federal Government expects Origin to support its workers and community.
“The early and sudden closure of this 2880MW generator will leave a considerable gap in reliable generation in the National Electricity Market, representing more than 20 per cent of New South Wales’ generation output,” Mr Taylor said.
“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.
“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.
“The Morrison Government has a strong track record of dealing with these issues. We will work with the New South Wales Government and private sector to make sure there is an appropriate replacement.”
Managing the transition
Climate Councilor and Senior Lecturer at Macquarie University, School of Law and Energy expert, Dr Madeline Taylor, said, “Coal is not a commercially viable industry any longer.
“Some of Australia’s biggest power companies are not able to compete from a price perspective 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.
“The newly-announced Hunter-Central Coast Renewable Energy Zone (REZ) is set to provide 100TW hours of power by the mid 2020s, which is almost double the generation of New South Wales’ entire coal fleet.
“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 New South Wales’ power.”
Clean Energy Council Chief Executive, Kane Thornton, said that the move highlights the need for a nationally coordinated approach to manage the retirement of fossil fuel generation.
“Investors are willing to develop the projects that put Australia on the pathway to a future powered with clean energy, but what’s missing is a strong federal policy to underpin that new investment, as well as proactive support for workers and communities for a just transition,” Mr Thornton said.
“These aging coal assets represent a key vulnerability in the power system, and it is critical that we bring forward the necessary investment in renewable generation and storage to replace them.
“The clean energy sector is facing a growing labour shortage and deepening skills gap. With proper planning for communities and consideration of education and training needs, we could be offering pathways to help transition many coal workers into careers in clean energy.”
Mr Thornton said that the recent announcement of over $100 billion worth of proposals for its Hunter-Central Coast REZ illustrates how clean energy initiatives can resolve a number of barriers to investment.
“While the renewable energy industry is ready to deliver replacement supply, these accelerated coal retirements need to be coordinated to ensure our electricity system remains stable through this rapid transition, and so that we maximise opportunities for local economies,” Mr Thornton said.
