“Delayed and over budget:” Sharpe strikes out at Kean, gives mixed signals on Eraring

NSW energy minister Penny Sharpe has taken aim at her Coalition predecessor Matt Kean as one of the rare examples of bipartisan energy policy in Australia threatens to unravel over the proposed closure date of the country’s biggest coal generator.

Sharpe’s attack on Kean on Monday came after a story published in the Sydney Morning Herald quoted Kean as saying that the cost presented to him on keeping Eraring open beyond 2025 were as much as $1.5 billion a year, although this appears to have been framed during the peak of the energy crisis last year.

Kean managed to get bipartisan support in the state for his ambitious renewables roadmap, designed to replace the state’s ageing power generators in as little as a decade. He and Eraring owner Origin even kept the closure timing secret from the then federal Coalition government as they put together plans to accelerate that roadmap.

Now, however, divisions have emerged as the new state Labor government vacillates over the closure date – now less than two years away – amid delays and some cost blowouts in the rollout of renewables and transmission, although not storage.

Sharpe called a “doorstop” with media on Monday to declare that Kean’s comments in the SMH were “not helpful”, and to insist that Labor had inherited a renewable infrastructure roadmap that was “over budget” and “delayed.”

“We need to transition to clean green energy as quickly as possible,” Sharpe said. “It’ll be cheaper for households and for businesses, but we also have to manage the very bumpy ride that occurs as a result of the challenges that have been left with privatisation.

“The former minister was around a couple of years ago, he left us with delays and blowouts. And we’re now getting us back on track. And we’re not going to let him get in the way of the transition that New South Wales needs to make.”

Sharpe acknowledge that the Australian Energy Market Operator’s system reliability report, released last week, suggested that if the state government’s current “firming tender” was delivered as planned, then there was unlikely to be any breaches of the reliability standard in NSW, even with the closure of Eraring in 2025.

“The AEMO report says that if everything goes right, then it will be able to deliver it (reliability),” she said. “That’s why the government is working through all of the options when it comes to retirement of coal fired power, and the need for speed when it comes to renewables.”

But then she also went on to say:

“This is not a simple thing. We are essentially asking to do the industrial revolution in about 15 years. The retirement of coal fired power in the state where 70% of our power relies upon it, is not an easy thing to do. We’re working carefully through what comes out and what goes in. We need everything to go right.

“We also need to make sure that we manage any risks to the households and the businesses of New South Wales and that’s definitely something to also pay very close attention to.”

Sharpe said the government planned to release the “health check” of the state grid written by energy consultant Cameron O’Reilly, which is reported to have recommended talks with Origin about an extension, along with the government’s response, “very soon.”

She also said that the government had not yet costed any extension, or even any alternative, which suggests that no talks had yet been held with Origin Energy.

Sharpe made it clear that life would be much easier for the government if the generators and transmission lines remained in government hands, although it should be noted that those states where the grids and generators are largely state owned – Queensland and Western Australia – have been the slowest in the uptake of renewables.

W.A., after getting a reality check on the implications, and the opportunities, for zero emissions power in a world rapidly tilting towards net zero, is now fast-tracking its switch to renewables.

But it also has the power, as it exercised just last month, to keep coal fired units “in reserve” to manage some of the short term timing challenges in building new infrastructure and keeping others open.

Victoria has been forced to strike secret deals with the owners of two of its remaining brown coal generators to ensure that they stay online until enough new generation and storage is built.

There are no such accommodations in NSW, and if the state government wants to pursue such a deal – say to keep two units at Eraring open until after the next state election, as modelled even by AEMO – then it needs to strike a deal with Origin, or its likely new owner Brookfield.

The costs of that are simply not known. The $1.5 billion number quoted by Kean appear to reflect the soaring cost of coal at the very peak of the energy crisis, but the other numbers – $240 million plus the cost of coal – are similar to what others have quoted. Either way, it would be a lousy outcome for everyone except for the Eraring owners.