Origin says big batteries “playing well” with ageing fossils, but won’t rule out new gas peakers

Origin Energy says its growing fleet of big batteries is “playing really well” with the gentailer’s portfolio of assets, including by doing the heavy lifting for its aging fossil fuel plants, but it won’t rule out future investment in new gas peakers.

In a briefing on the company’s half-year 2026 results, Origin executives batted off a 45 per cent dip in profit with talk of growing revenues and retail customer numbers, and of the valuable flexibility that the first stages of its Eraring and Supernode batteries have brought to the asset base.

The first 460 megawatt (MW), 1770 megawatt-hour (MWh) stage of Origin’s Eraring battery, which is being built at the site of the New South Wales coal plant of the same name, has been completed on time and on budget. A second stage will take it to 700 MW and 3,170 MWh.

Further, Origin recently revealed that revenue is starting to flow from its tolling arrangement with the Supernode battery, in Queensland, while the 300 MW, 650 MWh battery it is building at the site of its Mortlake gas generator in Victoria is also approaching completion.

“The batteries are working really well in the portfolio,” Origin’s executive general manager of energy supply and operations, Greg Jarvis, told analysts on Thursday morning.

“There’s a few [revenue opportunities]; the intraday volatility still plays out. …Right now, in summer, it probably lends itself to really manage the … evening peak. So we’re probably doing all one-cycles. But you can see… going forward …how we can double-cycle these batteries as well. 

“So, you know, they’re playing really well in the portfolio. 

“The other benefit we get from these batteries is, you know, we don’t have to turn on gas peakers just for a one- or two-hour period, which is, you know, that leads to high maintenance costs.

“So, you know, we’re also seeing some benefit just, with the existing fleet, so we can use our gas peakers more for duration events. So really, these batteries – and we’re having a battery in every state – so that just gives flexibility right across the portfolio, which is playing very well for us.”

“There’s a lot of batteries coming into the system,” Origin CEO Frank Calabria added. “We feel very confident about the investments we’ve made. 

“They’ve lowered in cost, and we’ve been able to increase, pretty cheaply, incremental capacity and duration on that.” 

But despite batteries like Eraring increasingly doing the work of gas peakers, and doing it much more efficiently, Origin says it can see new gas peaking capacity coming into the market – potentially with the support of the Electricity Services Entry Mechanism (ESEM) being proposed by the Nelson Review.

“We’re early stages into a very large transition… so I think the need for everything is going to grow over time,” Calabria told the briefing.

“Probably the key thing, now, that the industry and policymakers and government will actually work on is, specifically, the ESEM, which is the contract mechanism being recommended by the panel that will drive future investment.

“We still remain of the view that that …there’ll be a lot of batteries being built, and that’s [already] underway,” Calabria said.

“There’ll need to be a replacement of energy over time, and … that energy is also going to need to come from sources like wind, which is why we remain very positive by having a very large-scale, attractive wind project … that’s going to be needed in the system. 

“And we do think there’ll need to be more gas fired generation introduced.

“Why the [proposed ESEM] mechanism becomes important for that asset class is … [that] we will need to have sufficient capacity for periods of time… where you’re going to need more than six, eight hours of storage. But they’re likely, over time, to be less frequent. And so therefore, they need to be supported by a well-constructed mechanism that rewards capacity appropriately. 

“So we will make judgments,” Calabria says. “But at the moment, making a large, gas-fired peaker, it would need a form of support that rewarded capacity over time.” 

On the fossil side of the ledger, Origin kicked off 2026 by announcing that it will keep the 2.88 gigawatt (GW) Eraring power station – Australia’s biggest remaining coal-fired generator – open for another two years beyond its already delayed closure date of August 2027.

In the briefing on Thursday, Origin’s executive general manager of energy supply and operations, Greg Jarvis, told analysts the company is “very confident” about keeping Eraring running until April 2029, without any major outages.

The plant generated 6.4 terawatt-hours over the half-year at an availability of just over 72%, after both planned and unplanned outages, the company says. 

Ironically, perhaps, Origin’s confidence in sweating Eraring for another three years seems also to have been buoyed by its recent battery progress, and the progress of the broader market, which is seeing less volatility as more firmed renewables comes online.

“I think the important thing here is that, you know, with the changing market, there’ll be opportunities where we can take out [Eraring] units when there’s low demand and high capacity and do proactive management,” Jarvis told the briefing.

“And so by doing that, they’ll improve the reliability. So, you know, pretty confident about, you know, extending these units out April 29.”

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