NSW Labor may buy Australia’s biggest coal generator to keep it open

The extraordinary comments came amid heightened speculation that Eraring owner Origin Energy may delay the closure of at least one of Eraring’s four units, and efforts by the fossil fuel lobby and its promoters to completely misrepresent the findings of a recent market operator report into future reliability levels.

NSW remains Australia’s most coal dependent state and one of the world’s most polluting grids, but its coal fleet is old and increasingly decrepit and needs to be replaced – even if climate change was not the concern that it is.

The Australian Energy Market Operator last month identified possible energy shortfalls in NSW and Victoria, but it made it very clear that this analysis took no account of the announced state government plans to hold a series of auctions for new wind, solar and storage capacity.

The reason these initiatives are not taken into account is that AEMO only allows itself to include named “committed” projects, and of course that can be done before the auctions are held.

Its survey merely serves as a guide to how much needs to be included in those auctions. It made it clear if those programs did proceed as planned, then there would be no reliably issues.

But that hasn’t stopped the fossil fuel lobby warning of the “lights going out”, led by the chair of the country biggest coal generating company and biggest polluter AGL, and any number of other paid lobbyists regularly quoted by the mainstream media.

NSW Labor has been happy to play along with this fear mongering, largely because it doesn’t appear capable of having anything else to say.

The NSW Coalition infrastructure roadmap, the brainchild of energy minister Matt Kean, is the most detailed and well thought out plan for the transition from coal to renewables ever seen in this country, and is now a blueprint for the whole country. But NSW Labor can’t bring itself to say that.

And the irony is that Minns’ idiotic comments could be self fulfilling. “It (Eraring) provides 25 per cent of the electricity needs for the state and provides many of the needs for the east coast of Australia,” he said. “If it’s taken offline, and there’s not the firming power in place, we could have major shortages.”

The current NSW Coalition government reportedly considered buying Eraring from Origin when the company first flagged the planned closure.

But they soon realised that would be a really dumb idea because it would kill private investment in new capacity, particularly in renewables and storage.

And Origin, the state government, and AEMO all took care not to tell then federal energy minister Angus Taylor about the planned Eraring closure for fear he would do something equally stupid, and make threats to Origin in the same way the federal Coalition government did after AGL first flagged the closure of the decrepit Liddell.

But there is a growing tendency by state Labor governments to intervene in the market.

The Victoria state government has promised to recreate the State Electricity Commission, both as a sort of green energy financier but also as a competing retailer, and has struck a secretive deal with EnergyAustralia over the timing of the closure of the Yallourn brown coal generator in the Latrobe Valley.

That deal was flagged as an agreement to bring forward the closure, but many suspect it was actually an agreement to prop up the generator to ensure it did not close any earlier.

But for NSW Labor to threaten any sort of intervention two years out seems extraordinary, and the fear is that this will translate into yet more investment delays and higher cost of capital because of market uncertainty.