The New South Wales (NSW) Labor government must do everything it can to stop the closure of the Eraring Power Station, with one think tank warning its shutdown could trigger major energy shortages and price hikes.
Eraring’s seemingly inevitable closure will follow that of Liddell Power Station, Australia’s second-largest power plant, which supplied power to approximately 750,000 Australian homes until its decommissioning in April.
“The closure of the Liddell Power Station has placed Australia’s energy generation network on the brink. Today the challenge is clear, no more affordable and reliable energy can be safely removed from the grid,” said the Institute of Public Affair’s executive director, Scott Hargreaves, in a statement on May 30.
“What is occurring in Australia has already been tried and has failed elsewhere. Germany and California offer sobering lessons for Australia on the risks of moving towards a higher level of dependence on renewable energy.”
Eraring, situated near Lake Macquarie, is set to close in 2025, with Origin Energy bringing the plant’s end seven years after the initial date set in 2032.
CEO Frank Calabria justified his company’s decision despite issues already confronting Australia’s rapidly transforming energy grid.
“Origin’s proposed exit from coal-fired generation reflects the continuing, rapid transition of the [National Electricity Market] as we move to cleaner sources of energy,” Calabria said.
“Australia’s energy market today is very different to the one when Eraring was brought online in the early 1980s, and the reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries.”
Liddell’s Closure Sent Power Prices Soaring
Concerns regarding Eraring’s potential closure mount from the already striking consequences of Liddell’s absence.Data from the Australian Energy Market Operator (AEMO) shows that since Liddell officially shut down on April 28, the wholesale price of energy per MWh in NSW has risen by 63.39 percent.
Liddell power station in the Hunter Valley region of New South Wales, Australia, on Apr. 22, 2018. AAP Image/Dan Himbrechts
In fact, over the three days following the station’s closure, wholesale prices jumped 159.98 percent, showcasing the volatility of the power grid amid the net-zero transition.
The short-term consequences of Eraring’s closure will likely dwarf Liddell’s.
The plant is the largest power station in Australia, with a capacity of 2,800 megawatts and an output of 12,000 GWh, representing 15 percent of NSW electricity generation—Australia’s most populous state.
Seeing that Liddell, on average, produced an output of 6,000 GWh and accounted for less than half of Eraring’s contribution to the grid, it is expected that power prices will take a substantial hike following the latter’s closure.
Nothing Ready to Replace Eraring, Report Says
In May, the IPA released a report (pdf), “Liddell The Line in the Sand,” detailing the consequences of its closure and why Australia’s state and federal governments should work to avoid that situation.The report reveals significant energy shortfalls in the face of demand if Eraring is closed due to the lack of adequate renewable alternatives.
It found that the Waratah Super Battery, a replacement initially proposed by the former Perrottet government, could only deliver 25 percent of Eraring’s maximum output for just two hours at peak performance before recharging.
Considering Australia only has 24 operational coal-fired power stations left, each closure will have wider ramifications, with Eraring’s likely to be felt across the country.
An Origin Energy power bill is pictured in Brisbane, Australia, on June 8, 2018. AAP Image/Dan Peled
It is by far Australia’s largest and most productive power station, with a capacity 144 percent greater than the national average. According to Origin’s estimates, the station accounts for 7.9 percent of the nation’s energy.
The last major closure which impacted national electricity prices was the decommissioning of Hazelwood in May 2017 by the Victorian Labor government.
National wholesale energy prices increased by more than 70 percent in a year.
Three years after its closure, the national average wholesale electricity price is 135 percent greater than the average over the previous decade. To place this in context, Eraring has a capacity of 2,800 MW, while Hazelwood produces 1,600 MW.
Government decisions to pressure energy companies to shut down fossil fuel generators come while Australian energy prices continue to soar. Gas prices, in particular, have felt the brunt of the Ukraine war, which has sent international demand and prices soaring—leaving Australian domestic users to compete with international buyers.
