28 March 2024
A new report released today by independent think tank Climate Energy Finance (CEF) finds that to extend the operation of Origin Energy’s Eraring coal power station on the NSW Central Coast – the country’s largest – beyond its planned phased closure in 2025 would cost NSW citizens a massive $120-$150m per year.
This is on top of more than half a billion dollars of public largesse in the form of coal subsidies to owner Origin.
The report recommends phased closure over 2025 with complete closure by the end of first quarter 2026, and confirms there is enough replacement firmed renewables capacity in the pipeline to offset the capacity withdrawn with no electricity supply gap. The lights will stay on.
CEF director and report author Tim Buckley, a leading energy analyst and former MD of investment bank Citigroup, said:
“Our report reviews available data to reveal that to keep all 4 units of Eraring open beyond 2025, NSW electricity users would be slugged for a minimum subsidy estimated at $120-150m per annum to private operator Origin Energy. This is very, very expensive ‘insurance’ for a non-existent reliability gap.
"It is also completely unconscionable in light of the fact that NSW electricity consumers are already funding Origin to the tune of around half a billion dollars in coal subsidies over 2023 and 2024.
"Origin Energy is operating an asset gifted to the firm a decade ago in 2013 – the then state government paid Origin $75m to take over Eraring when the asset was ‘privatised’ – meaning it has already enjoyed an exceptional rate of return way above its expectations for a decade.
"The company reported an average pre tax cash contribution from Eraring of $382m pa over FY2019-FY2021 for an asset it was paid to take off the state’s hands. While Eraring’s performance is not disclosed since that time, Origin reported in the first half of FY2024 that it doubled its underlying earnings overall.
"It’s past time for the NSW Government to stop making free bank for the private operator of a hyper-polluting, high-emissions, end-of-life coal clunker by gouging NSW citizens.
"The idea that Origin should be gifted yet again with largesse from the public purse – on top of the estimated $468m coal subsidy since the coal price cap was introduced December 2022 – is obscene.
"There is a time-critical imperative for the state government to redirect its investment focus and public capital to the energy transition.
"NSW Climate and Energy Minister Penny Sharpe now has a golden opportunity to turbocharge the state’s Consumer Energy Strategy and accelerate the deployment of distributed energy resources such as rooftop solar and batteries via well-targetted subsidy programs that will permanently slash household and business energy bills, alleviating crushing cost-of-living pressures – and enable the state to achieve its newly legislated 70% by 2035 emissions reduction target.
"We call on the NSW government to rule out extending Eraring and subsidising Origin to keep it open, prioritise the public interest, and responsibly invest public money in accelerating the energy transition to the benefit of all energy consumers.”
Stephanie Bashir CEO of Nexa Advisory, energy expert of over 20 years’ experience and previously Senior Director of Public Policy at AGL Energy, said:
“Delaying the closure of ageing coal-fired power stations, such as Eraring, will result in higher costs and emissions over the long term. The better approach would be to accelerate the rate at which we deploy new clean energy resources.
"Accelerating renewable energy planning approval processes in NSW is also key. These are currently 2-3 times slower than other states, adding 4-7 years to project progression and 25 times more expense for developers compared to an equivalent project in Queensland.
"Dialling in more demand side participation (DSP) in NSW – which encourages consumers to adjust or timeshift their electricity usage in response to market signals or grid conditions in return for a financial reward – is low-hanging fruit to reduce demand.
"Australia leads the way in rooftop solar, another critical complementary measure that should be accelerated in NSW as we are building the big stuff.”
ENDS
Contact details:
Report author Tim Buckley is available for interview via annemarie@climateenergyfinance.org 0428 278 880
or direct on tim@climateenergyfinance.org 0408 102 127