NSW can avoid electricity shortages without paying hundreds of millions to keep Eraring open, expert says

New renewable energy and battery projects will provide enough capacity when Australia’s largest coal-fired power station closes, report finds

New South Wales can avoid electricity shortages without paying hundreds of millions of dollars to keep Australia’s biggest coal-fired power plant open after a spurt of renewable energy and battery approvals and weak demand growth, a new report argues.

Analysis of the 2024-30 power sector by the Clean Energy Finance director Tim Buckley found NSW will have enough capacity to cover the exit of the 2,880-megawatt Eraring station now set for closure by owner Origin Energy in August 2025.

“There is no reason why the taxpayer should be on the hook for multiples of hundreds of millions of dollars to keep Eraring open,” Buckley said, adding he had become “materially more confident” after a burst of federal and state moves at the end of 2023 to support more storage and large-scale renewables projects.

The report found NSW was “leading the world in the financing, approval and construction” of new battery storage systems. It cited the 850MW/1,680MW hour Waratah Super Battery now under construction and Origin beginning work on its 700MW/2,800MWh battery at the Eraring site.

AGL also reached a final investment nod last month on its $750m 500MW/1,000MWh battery that it will build on the site of the Liddell power plant that shut last April.

The state’s planning department in December also approved its first windfarm in two-and-a-half years, Engie’s 290MW Hills of Gold project, while Squadron Energy started building its 414MW Uungula windfarm last week.

“There remains a very strong NSW proposed pipeline of projects of some 50GW of firmed renewables, many already in the approval process,” the report said.

Methane gas peaking capacity is also on the rise. EnergyAustralia’s 316MW Tallawarra B plant started operations last month and Snowy Hydro’s 660MW gas Hunter Power Project is due for commissioning by year’s end.

NSW’s power grid, though, still faces strains. A one-day heat spike last month combined with the unexpected failure of half of the Mt Piper coal-fired plant prompted the energy minister, Penny Sharpe, to ask consumers to reduce electricity use.

The government said talks with Origin about Eraring – including the possibility of keeping two of its four units on standby beyond August 2025 – were ongoing.

The Cef report noted the Energy Security Target Monitor report, released without fanfare late last year by the Australian Energy Market Operator, also concluded government actions had nullified the risk of reliability gaps emerging post-Eraring.

Two other main trends support the report’s conclusions.

Electricity demand has been growing much slower than forecast, rising just 0.6% in 2023 or well shy of the 2.7% annual expansion assumed by Aemo out to 2030 and beyond.

Rooftop solar and other distributed solar were also likely to increase as the price of photovoltaic panels fell and retail costs of electricity remained high.

Installations of rooftop systems totalled 3.17 gigawatts nationally in 2023, up 14% and just shy of the record 3.23GW in 2021, data from SunWiz showed.

Buckley also predicted a faster rollout of 5MW solar plants with batteries, with one developer alone planning as many as 40 in Victoria and NSW. These could be built rapidly and serve as “solar soakers”, generating and storing low-cost power to be released after the sun goes down and wholesale electricity prices rise.