“Massive retrograde step:” Renewables industry says “no case” to extend Eraring

Clean energy industry leaders are calling on the New South Wales government to rule out a taxpayer funded extension to the operating life of Australia’s largest coal plant, saying ongoing speculation will damage investor confidence and further slow the shift to renewables.

The calls follow reports that a “health check” on the NSW state grid prepared by energy consultant Cameron O’Reilly has recommended a delay to the intended – but not locked in – 2025 closure of the 2.88GW Eraring coal plant in NSW, owned by Origin Energy.

And while critics argue there is no case for such a “massive retrograde step” in Australia’s already much delayed shift to renewables, NSW Labor has – since being elected to power in March – given the distinct impression that it sides with O’Reilly.

“We know the NSW government will always work in the interests of energy users across the state, and their vision is firmly focused on the transition to a clean energy future,” said Clean Energy Council chief Kane Thornton on Wednesday, rather generously.

“However, any extension of coal-fired power stations dilutes investor confidence, and can have unintended, long-term impacts on generation and supply.

“It means we miss out on the jobs and opportunities, and our transition to affordable and sustainable power is slowed. This has economy-wide impacts that will be felt for a long time.”

Thornton says the timing of speculation around Eraring is particularly unfortunate, given the record low number of financial commitments to new wind and solar projects in Australia, confirmed just today by the latest CEC report.

Tim Buckley from Climate Energy Finance says using taxpayer subsidies to extend the life of Eraring would be “a massive retrograde step,” when what is needed is the exact opposite – an accelerated transition to firmed renewables.

“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,” Buckely said on Tuesday.

“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,” he said.

Simon Corbell, the CEO and chair of the Clean Energy Investor Group says any delay to the closure of Eraring will undoubtedly create significant downside risk for investors.

“This could result in less investment in new clean energy projects in NSW and will blow out our emissions target and budget,” Corbell said.

“Australia cannot afford to have that at this time.”

Nexa Advisroy’s Stephanie Bashir says talking about coal closure delays as if they are a “fait accompli” is wrong – and fails to factor in the cost to consumers of such a move.

Nexa’s analysis finds consumer bills would be $2,250-3,000 higher over the next 10 years if the transition to renewables is further delayed – to say nothing of the missed renewable energy targets and blown emissions budgets.

“The risks remain clear, unless we act smart and differently to accelerate the build out needed, consumers will pay more for their energy. If we don’t act now, and differently, we are going to miss our targets and cost consumers and taxpayers more into the bargain,” Bashir says.

Bashir also warns that keeping old coal kit online for longer doesn’t in any way guarantee reliability of supply.

“This route… would result in lower reliability, and higher costs and emissions,” she says. “Far better to accelerate the rate of new clean energy resource deployments.”

Buckley, meanwhile, points out that most coal plant closures are being accelerated – with even youngest coal plant on the NEM, EnergyAustralia’s Mt Piper, expected to shift to a backup role a decade ahead of its full retirement.

John Grimes, the CEO of the Smart Energy Council says the real test for NSW Labor premier Chris Minns will be whether he will stick to the problem – aging dirty expensive coal power – or fast-track the solution.

“The Smart Energy Council is calling on the NSW government to reject the recommendation of the Electricity Supply and Reliability Check Up to extend the life of Eraring Power Station,” Grimes said.

“Extending Eraring’s fossil-fueled life fails the economic test, fails our climate, will increase future energy bills and delays investment in renewable energy storage and generation technology that exists right now.”