Origin energy to close Australia’s largest coal plant years ahead of schedule

Eraring coal power station in New South Wales

On the 17th of February, Australian energy company Origin caused a stir by announcing the scheduled closure of the Eraring Coal power Station - AKA: the largest coal power plant in Australia.

Origin signalled they could close down the power plant as early as August 2025, seven years ahead of their earlier floated timeline. The move comes as the company tries to transition towards a net-zero energy policy by 2030. Sending their largest coal station to an early retirement will be a major part of meeting those commitments.

The station, now set for closure, has operated day and night from the western shore of Lake Macquarie in NSW since the 1980s. The Eraring station is made up of four 720 MW steam driven turbines, which contribute a total capacity of 2,880 MegaWatts to the National Energy Grid - the most of any power station in Australia.

Origin will spend approximately $240 million dollars on the rehabilitation of the Eraring site, including the installation of a 700 MW battery facility. The facility had been nearing its twilight years, with an expected retirement in 2032 - but this announcement moves that timetable up significantly.

Renewable energy is changing things

Australia’s biggest energy companies are beginning to put their money where their mouth is, as the pressure to adopt renewable energy becomes greater.

Origin chief executive, Frank Calabria said that “it has become increasingly clear over the last few years that the influx of renewables has changed the nature of demand for baseload power.”

“The reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower cost generation,” Calabria added.

Facing the fact that solar and wind power are growing parts of the sector, this move signals that coal power will need to be phased out sooner rather than later. Origin has planned to increase their investment in renewables, while maintaining a smaller fleet of coal power stations to manage baseline capacity needs in the grid.

How will this affect electricity prices in Australia?

The big question is: will this impact energy prices? In the short term, a move like this is unlikely to immediately move electricity prices one way or another. Once the plant begins to shut down, it could depend on whether Origin energy has achieved their goal of replacing the plant with low-cost renewable generation.

The Australian Energy Market Operator has not speculated on any changes to affordability, so at this stage it's probably too early to forecast.

With the electricity landscape changing rapidly, make sure you’re getting the best deal on your energy with Mozo’s energy comparison tools.

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