Under the two-year agreement,Eraring must generate at least six terawatt-hours each year,the equivalent to the typical annual output of two of Eraring’s four generating units and enough to resolve the forecast reliability gap.
Eraring must also maintain its workforce of about 220 people,commit to a maintenance plan and adhere to its licence conditions,which include environmental protections.
Mookhey conceded he would have preferred not to be in a position to strike the deal,and criticised the former government for itsdecision to sell Eraring to Origin in 2013.
But,he insisted,the deal struck the right balance.
“This is a finely calibrated risk-sharing arrangement. It’s not an act of corporate welfare on the part of the government. But nor is it an act of charity on the part of Origin Energy,” he said.
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Origin now expects to close Eraring on August 19,2027.
Premier Chris Minns said he made an election commitment that Labor would extend the life of Eraring if required to “keep the lights on in NSW”.
“The people of NSW now have certainty that the NSW government has a plan to ensure we have reliable energy while we transition the workforce and the economy to net zero,” Minns said.
“The best way to undermine the renewable energy transition is to have the lights go out in 2025. I’m not letting that happen.”
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The agreement will be tabled in parliament in the next sitting week to ensure transparency.
Origin chief executive Frank Calabria said the company believed the agreement struck the right balance,enabling Eraring to continue supporting the security of electricity supply in NSW through the energy transition while making compensation available to Origin if economic conditions for the plant are challenging.
“This agreement supports Eraring to continue to play an important role in maintaining reliable power for businesses and households through a period in which there remains considerable uncertainty about the volume and timing of new renewables,transmission and firming infrastructure coming online,” Calabria said.
“Importantly,today we can give our Eraring employees,our suppliers and the local community greater certainty around the future of the plant as we transition towards its retirement.”
The prospect of using taxpayers’ money to extend the life of Eraring puts the NSW government on course for a clash with renewable energy advocates and climate campaigners. Coal is a dominant source of greenhouse gas emissions that the world must phase out to help avert catastrophic global warming.
“There is no way Australia can meet its renewable and climate targets if we keep propping up coal-fired power stations,particularly the nation’s biggest,” said Wayne Smith,acting chief executive of the Smart Energy Council,which represents solar and battery installers.
However,with at least half of the remaining 14 coal generators on the eastern seaboard due to close within the next decade,governments are becoming increasingly nervous that not enough new renewable energy generators,storage projects and transmission lines are being built to keep power supplies and prices stable.
The Victorian government has already intervened to ensure two of its biggest coal generators do not shut prematurely.
“Australia’s great energy transition – from fossil fuels to renewables – is not going well,” said Tony Wood,energy director at research organisation the Grattan Institute.
In a report published last month,Wood foreshadowed that NSW would need to prop up Eraring until the grid was equipped to handle its withdrawal,and may also have to cut a deal to support the Bayswater coal generator.
With Nick Toscano,Mike Foley
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