“When coal breaks down, bills go up:” Anger and frustration as Origin extends life of biggest coal plant, again

Origin Energy, the country’s biggest energy retailer, has announced that it will keep the country’s biggest coal fired generator – the 2.88 gigawatt Eraring facility in NSW – open for another two years.

Origin says it will keep all four units at Eraring open until April, 2029, nearly four years after the “early” closure date of August, 2025 that was first announced in 2022, which was then delayed until August, 2027.

The decision will shock many in the industry because of the implications of having the country’s biggest coal plant operating four years beyond its planned early closure, particularly in terms of emissions, and prices, and the impact on other investment.

But it should be no surprise, given that Origin itself has not built, or even started building, any new wind or solar projects since its “early closure” announcement four years ago, and has given many hints that it was looking at another extension.

Origin says it has a number of big renewable projects on the table – such as the giant Yanco Delta wind project in the south-west of NSW, and other projects in the New England region – but none has started construction and none will be completed, or even start generating, before the new closure date for Eraring.

Instead of new bulk energy – wind and solar – Origin has focused on battery storage, including the country’s biggest at the Eraring site, and another at Mortlake, next to its gas generator. It has also signed battery off take agreements with a number of battery projects, including the massive Supernode battery in Queensland.

The NSW government, worried about potential energy shortfalls, but more particularly wholesale price surges in the lead up to an election, agreed in 2024 to underwrite the first extension to Eraring until 2027, although Origin has made so much money out of the operations of Eraring it has not needed to draw down on that funding.

And the profitable operation of Eraring will no doubt continue until 2029, with NSW energy minister Penny Sharpe saying there will be no extension to the underwriting agreement beyond August, 2027.

“My number one job is keeping the lights on and putting downward pressure on power prices. NSW is making real progress replacing ageing coal-fired power stations,” Sharpe said in a statement.

“Since the election, we have increased the amount of renewable energy capacity in operation by almost 70%. That’s equivalent to Eraring’s capacity.

“Current energy security projections show NSW is expected to have sufficient energy supply when Eraring closes in 2029, thanks to new renewable generation and storage coming online.”

Origin, however, has contributed nothing to the added capacity of wind and solar, and its intentions have been well flagged by CEO Frank Calabria in recent months, including in this interview in an episode of Renew Economy’s Energy Insiders podcast last year.

In a statement on Tuesday, Calabria said the decision to extend the life of Eraring was based on a “range of factors”, including market conditions, the needs of its customers and the role the facility plays in the NSW grid.

“Good progress is being made on the delivery of new energy infrastructure including major transmission works and projects like our large-scale battery at Eraring, but it has become clear Eraring Power Station will need to run for longer to support secure and stable power supply,” Calabria said.

“Our decision to keep Eraring operating until April 2029 provides more time for renewables, storage and transmission projects to be delivered, and reflects uncertainty regarding the reliability of Australia’s aging coal and gas fleet.” 

Eraring will be 45 years old at the time of closure, and the Australian Energy Market Operator has made clear that the lack of reliability in Australia’s ageing coal fleet remains the biggest risk to grid reliability.

Calabria says Origin has made significant investment in the maintenance of Eraring’s four units in recent years, to improve its reliability and flexibility, which allows it to ramp down by 80 per cent of its capacity, particularly in the middle of the day when rooftop solar is dominant.

“Origin does not intend to invest in any further major maintenance overhauls ahead of the plant’s April 2029 retirement,” Calabria said.

The first stages of the Eraring Battery commenced commercial operation in late 2025 and the remainder will come online in the first quarter of 2027, taking its total capacity to 700 MW and 3,160 MWh, providing an average of 4.5 hours of storage capacity in NSW. 

None of the major retailers have done much in terms of investment and construction in new wind and solar farms in the last few years, focusing mainly on battery storage to augment their influence of evening peak prices that they already dominate with their portfolio of peaking plants.

The rollout of new wind and solar in NSW has also been slowed down by delays in planning approvals and transmission projects, and limited capacity in key zones, south as the south-west of the state, although it is now looking to support more projects outside REZs, with a focus on solar and battery hybrids.

“No one wants to see these coal fired power stations open longer than they need to, or close earlier than expected,” Federal energy and climate minister Chris Bowen said in a statement.

“Coal remains an unreliable source of energy – when coal breaks down, bills go up. Eraring has faced an unplanned outage since Christmas Eve, and isn’t planned to come back online until later this week, resulting in a loss of 720MW available energy per day.”

Others pointed out that consumers would pay, even if the state government did not.

“The NSW Government’s claim that taxpayers haven’t paid a dollar is disingenuous,” Nexa Advisory’s Stephanie Bashir said in a statement.

“Consumers are paying through the nose as high wholesale prices are locked in by delays to new renewable supply and the growing unreliability of coal plants that should already be on the way out.

“This situation is the direct result of a failure of the NSW Government to move with urgency to approve and deliver replacement renewable generation, transmission and storage at the pace required.

 “Every delay in getting renewables and storage online is another excuse to keep ageing coal plants running longer than planned — and every extension comes with a price tag for consumers.

“If the NSW Government is serious about lowering power bills and keeping the light on, it must fast-track replacement renewables, fix the blocks on transmission build and stop normalising coal extensions as the default option.”  

Origin also claimed that the delay to the Eraring coal generator will not affect its own climate targets, given these include metrics set for 2030, and 2050.

But analysts pointed out that Eraring has emitted around 12.5 million tonnes of CO2 per year on average for the last five years. 

“Far from supporting the transition, Origin’s decision will crowd out investment in the clean, modern sources of generation we need to be switching to,” said Nature Conservation Council CEO Jacqui Mumford. 

“NSW was already not on track to meet its 2030 climate target. This decision puts a safe climate further out of reach, even as our communities are recovering from fires and flash-floods fueled by the climate crisis.” 

The Clean Energy Council said new outages at Queensland’s Callide coal generator last week highlighted the issue of reliability in the coal fleet, or the lack of it.

“An orderly transition matters, but the reality is that old coal power stations are increasingly unreliable and expensive, and that volatility flows straight through to consumers,” Ms Trad said.

:The consequences of these unexpected outages are material. Large coal units, averaging around 1500 MW in capacity, going offline without warning have been a major contributor to wholesale price spikes across the NEM in recent years,” CEO Jacqui Trad said.

“In the 12 months to 31 October 2025, an average of 24 per cent of coal-fired generation was unavailable in NSW and Queensland, with Victoria close behind at 19 per cent. In just one month from late October to late November last year, there were seven unplanned coal outages.”

She said that during that period, wholesale electricity prices surged from around $70/MWh in October to $220/MWh in NSW. The analysis recorded 128 unplanned coal breakdowns – eight times more than expected by the market operator.

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