Eraring unit trips and sends prices soaring, just as Coalition launches new price scare campaign

Timing is everything. And so it was on Monday, just as the Morrison government launched into yet another scare campaign about coal closures and rising prices, that a unit at Australia’s biggest coal generator, Eraring, tripped and sent wholesale prices in NSW to more than $15,100.

The Morrison government has had only one message to the public since been taken by surprise by Origin Energy’s decision to close the 2.88GW Eraring seven years early in 2025, and then seeing Brookfield and Mike Cannon Brookes team up for a bid for AGL, with the intention of rapidly closing its ageing coal plants.

The message from Morrison is that coal plants should keep on running, and closing them early will reduce reliability and causes prices to rise. Just about everyone else in the industry knows this is nonsense, because the greatest threat to grid reliability is the unexpected failure of a major coal unit.

And that is something that is happening more regularly as the units age and struggle to compete against cheaper wind and solar, and storage.

On Monday, at 2.05pm, unit 2 at Eraring tripped suddenly and 649MW of capacity suddenly disappeared from the market. The lights stayed on because other units, including batteries, responded to keep the frequency stable, and NSW quickly switched from being an exporter of energy to an importer.

But the prices spiked to $15,100/MWh in NSW, and the Australian Energy Market Operator was sufficiently concerned to issue an Actual Lack of Reserve 1 notice, meaning it might have enough back up if another unit suddenly tripped, but not if more than that fell off the system without warning.

In Queensland, the wholesale price also jumped to $14,860/MWh. And both NSW and Queensland experienced further price spikes in following hours. Eraring 2 has not returned to service.

Watt Clarity, the providers of our popular NEMWatch widget, have some more insights into the market happenings here.