NSW confirms Eraring closure delay driven by fear of pre-election price shocks
The NSW government says its controversial decision to delay the closure of the country’s biggest coal fired power generator was driven by concerns over a jump in electricity prices.
The Eraring facility was due to close in August 2025 but will now keep at least two units open until August 2027, a few months after the next state election.
The decision is about price rather than the threat of a supply shortfall, which the AEMO has said is unlikely to occur if new wind, solar and battery projects are delivered on time.
But the failure to build new capacity in NSW before the 2025 closure, and delays caused by planning, connection, and commissioning holdups, have forced the state's hand.
Modelling that the Minns government used has been released which confirms that the greatest benefit of the delayed closure would come from lower prices.
A summary of the analysis tabled in parliament suggests the savings on wholesale market prices would total $4.4 billion.
The report says this would outweigh the $1.1 bn negative consequences from higher emissions as a result of burning of more coal.
The numbers cited in the report were made on the assumption that Eraring was to close in late 2028 – confirming speculation at the time that NSW was looking for a longer delay.
It means that the wholesale price benefit is more likely to be less than $3 billion under the deal actually negotiated, and it is not clear that those benefits will actually occur.
This situation is being exploited by big market players who are busily hoovering up the operational rights of most of the new capacity, particularly battery storage, that is being brought to market and which could have introduced more competition.
The futures market agrees. It has already pushed the anticipated wholesale price of electricity in NSW in 2026 and 2027 way beyond the price modelled.