Coal’s death march gathers pace as Origin fast-tracks huge power station closure

The retreat from coal is gathering speed after Origin announced the potential early closure of the Eraring power station in NSW and the installation of a 700 megawatt battery on the site.

Feb 17, 2022, updated Feb 17, 2022
The impact of net zero policy will hit everything from small businesses to massive power generators.

The impact of net zero policy will hit everything from small businesses to massive power generators.

It follows a decision by AGL this week to bring forward the closure dates for its 2640-megawatt Bayswater coal-fired power plant in New South Wales to “no later than” 2033 and for its 2210 MW Loy Yang A power station in Victoria to 2045.

Origin said the market was increasingly “not well suited to traditional baseload power stations” and their viability was challenged.

It came as Queensland coal company Stanmore Resources said coking coal, used in steel production, was facing supply constraints.

“Whilst supply (is) expected to recover in the short term, medium to long term supply is limited by scarcity of economic deposits, difficulty in obtaining approvals or funding for new mine development and export infrastructure limitations,” Stanmore said.

But that was having the effect of holding up prices. Stanmore said there were significant increases in demand for steel infrastructure through the growing pace of decarbonising the global economy. Indian steelmakers had also announced projects worth $11 billion over the next five years.

The decision by the two energy companies puts more pressure on the Queensland Government which has so far only shortened the life of the Callide B station, but continues to hold firm on the life of the relatively young fleet held by Stanwell and CS Energy.

Queensland also has privately-owned stations and the Intergen-owned Millmerran power station is not scheduled to close until 2051. The Government-owned Stanwell power station is scheduled to close in 2046 and the CS Energy Kogan Creek has an end date of 2042.

Even Origin has said coal had been put under “unsustainable pressure by cleaner and lower cost generation, including solar, wind and batteries”.

Origin has submitted a notice to the Australian Energy Market Operator indicating the potential early retirement of the 2880-megawatt Eraring power station at the end of the required three-and half-year notice period.

Origin chief executive Frank Calabria said the company’s proposed exit from coal-fired generation reflected the continuing, rapid transition of the NEM as we move to cleaner sources of energy.

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“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.

“To enable Origin to support the market’s continued transition to renewables, we intend to utilise the Eraring site beyond any retirement of the coal-fired power station, with plans to install a large-scale battery.

“We have carefully weighed Eraring’s future for some time, which has included extensive consultation with the NSW government to identify what options might exist for the future of the plant. Eraring is a high-quality asset, run by a skilled and dedicated team, that has worked tirelessly to supply reliable and affordable energy in NSW for four decades.

“However, it has become increasingly clear over the last few years that the influx of renewables has changed the nature of demand for baseload power.

“At the same time, the cost of renewable energy and battery storage is increasingly competitive, and the penetration of renewables is growing and changing the shape of wholesale electricity prices, which means our cost of energy is expected to be more economical through a combination of renewables, storage and Origin’s fleet of peaking power stations.

“The mechanisms are now in place to guide future investment in supply, including the NSW Roadmap, and firm commitments have been made for other dispatchable capacity to come into the market over the coming years, as well as new transmission infrastructure, which are expected to more than compensate for any exit of Eraring.”

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