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Lights Will Stay On: Australia’s Biggest Coal Power Station Can Be Closed In 2025 – Here’s How

Climate Energy Finance 5 mins read

A new report by independent public interest think tank Climate Energy Finance (CEF), The Lights Will Stay on: NSW Electricity Plan 2023-2030 shows that NSW can close Australia's biggest coal power station, Eraring, on-time in 2025, secure supply, put downward pressure on prices and drive decarbonisation of industry by:

  1. Continuing the current run-rate of 1.2 gigawatts (GW) annually of NSW rooftop solar installs.
  2. Front-end loading at least 1.2GW annually of utility scale wind and solar within the state to 2030. 

This would replace the electricity generation capacity equivalent of 2.88GW at Eraring, and the 1.32GW Vales Point coal power station, earmarked for closure in 2028/29 (when it will be an entirely end-of-life 50-51 years of age, despite recent commentary from its owners about a possible extension).

The report’s findings are supported by the Clean Energy Investor Group (CEIG), representing renewable energy investors with ~11GW of installed capacity across ~70 power stations and a portfolio value of ~$24bn; specialist energy consultancy Nexa Advisory; and community advocacy groups including Solar Citizens – see quotes below.

CEF’s analysis shows that there are more than enough renewable energy projects in the investor pipeline and that capital is ready and available, assuming grid connection and approvals processes can be expedited to lock in both early final investment decisions by investors and timely construction. 

Delaying Eraring’s closure would require NSW to pay at least an estimated $200-400m pa in public subsidies to its operator, Canada’s Brookfield – funding which would be far better invested in accelerating the renewables build out. Delay would also undermine both the NSW government’s climate policy, and the Federal government’s 82% by 2030 renewables target and and 43% emissions reduction target. Talk of delaying Vales Point’s closure ignores obviously increasing risks of catastrophic failure at any point in time, given it reaches the end of its 50 year lifespan in 2028/29.

The report calls on NSW Energy Minister Penny Sharpe to lift NSW’s 2030 renewables target to at least 70% and:

  • Match the Federal government’s program to support rooftop solar, storage and energy efficiency upgrades to 60,000 social housing homes with funding from the $1bn NSW Energy Security Corporation, immediately alleviating energy poverty for those most vulnerable. 
  • Accelerate the rooftop solar and batteries program rollout on 21,700 buildings across 2,200 public schools. 
  • Move the Federal Government to lift the Small-scale Renewable Energy Scheme (SRES) cap from 100kW to 1,000kW to speed commercial and industrial installs of distributed solar (helping deliver half of new capacity needed from DER with no grid delays).
  • Accelerate approvals for utility-scale renewable energy projects that must be built rapidly ahead of closures, focusing on the strategic prioritisation of plants able to gain grid connection.
  • Accelerate and upscale NSW Renewable Energy Zone (REZ) tenders and long term energy service agreements (LTESA) tenders, providing revenue certainty for private investment in new renewables.
  • Flood the market with an underwritten low cost $25-35/megawatt hour (MWh) electricity floor price and minimum volume offtakes for new utility solar, de-risking these projects for investors; and expedite approvals to bring them online within 2-3 years. 
  • Direct Transgrid and Essential Energy to reassess their grid transmission and distribution capacity constraints, in light of PowerLink in Queensland finding that 10 gigawatts (GW) of new RE can be added even before major grid transmission projects are completed.

Report author and CEF director Tim Buckley said:

“NSW has led Australia on the development of its REZ roadmap, but we know grid transmission, like pumped hydro storage, is slow to get community buy-in and then be built. Meanwhile, the existing grid has plenty of spare capacity to accommodate within-state distributed rooftop solar and behind-the-meter storage in homes and businesses, as well as infill utility-scale wind and solar located strategically across NSW. 

“There is no case to delay the planned closure of Eraring and pay operator Brookfield the estimated $200-400m in public subsidies to do so. This money should be invested in NSW’ energy transition. We call on Energy Minister Penny Sharpe to take the action detailed in our report and flood the market with renewables firmed by accelerated deployment of  batteries, to drive more capacity. This will ensure supply and reduce wholesale electricity prices, putting permanent downward pressure on energy bills whilst also better aligning our decarbonisation pathway with the climate science.

"The NSW government and AEMO should take Friday's announcement by the owners of Vales Point that it may extend the life of the plant to 2033 with a massive bag of salt. The idea that a 50 year old plant can just be extended another 4 years without serious risk of catastrophic failure is ridiculous, and no desktop study can ensure the end-of-life plant's reliability." 

Simon Corbell, CEO of the Clean Energy Investor Group said:


“Delaying the closure of Eraring creates significant downside risk for investors. 


“Investors have been making decisions on new clean energy projects based upon the expected closure of Eraring in 2025, changing the date will mean investors will be less confident about future announced closures, and will have less confidence when it comes to making future investment decisions in NSW.


“We cannot afford to have less investment in new clean energy projects in NSW, or in Australia, at this time.”


Stephanie Bashir, CEO and founder of Nexa Advisory said:


“We are talking about delays to the closure of Eraring coal-fired power station as if it is a fait accompli.


“The review commissioned by the NSW energy minister will show that there are sufficient renewable energy generation and storage projects in the pipeline to replace our coal-fired power stations on time.


“We now need to prioritise and accelerate the project connections and statutory approvals, while maintaining rigor,  for already committed and anticipated generation and storage projects.  This would add a further 4.3 GW of firmed low carbon generation to the NSW power system. Our research also shows that bolstering firming auctions through the LTESA or Federal Government Capacity Investment Scheme and bring on additional “insurance” capacity earlier will be critical.’


“Taking action now would mean Eraring can still close in August 2025 as scheduled.  Lack of accelerated build out of generation, storage and transmission right now has the potential to delay not only this closure, but others too. That will put power affordability, reliability and security at risk. And Australia will fail to meet its emissions targets.


'The world is watching.”


Heidi Douglas, national director of Solar Citizens said:

“Instead of subsidising dirty, polluting coal power by extending the life of Eraring, we want NSW taxpayers’ money to be invested in community energy resources like support for home batteries, solar and vehicle to grid. 

The ~$300 million dollars per year to keep Eraring burning coal for our power is burning taxpayers’ money – money that would be much better spent on ways to bring our energy bills down long term and reduce our carbon emissions. By investing in home solar for all, and marrying home solar with batteries and vehicle to grid to use this sun power at night, every home becomes a power generator that can feed back into the grid and share cheap, clean power with its neighbours, bringing the cost down for all consumers. Solar Citizens is also looking at ways to ensure strata, apartments, rentals and social housing are able to access solar and batteries too. 

The Solar Our Schools campaign mobilised thousands of parents to call for solar and batteries on schools, to reduce power bills and create a clean source of community energy. The previous NSW government committed to funding this program, It would be a tragedy if the new Minns government doesn’t see this through. Let’s not play politics with our kids’ futures”.

Joel Dignam, executive director of Better Renting, said:

"The NSW Government should commit to co-investing with the Commonwealth to support energy upgrades for social housing. This will help people in public and community housing to have healthier and more comfortable homes, lower power bills, and help to support the planned closure of Eraring by helping us to use energy more productively."

Contact details:

Report author Tim Buckley is available for interview via 0428 278 880 or direct on 0408 102 127.

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