NSW Taxpayers Avoid $225 Million Cost for Coal-Fired Power Station
Origin Energy opts out of risk-sharing agreement, allowing continued operation of the Eraring power station until 2027 without additional taxpayer burden.
The New South Wales (NSW) government has announced that taxpayers will not incur a cost of $225 million in the upcoming financial year to keep the Eraring coal-fired power station operational.
Origin Energy, the operator of Australia’s largest such facility, confirmed it will not participate in a risk-sharing agreement with the state government.
Eraring will continue its operations until its scheduled closure in 2027, without the financial arrangement that was proposed by the NSW Labor government.
Upon taking office in March 2023, the Minns government expressed concerns about a potential energy reliability gap, prompting negotiations with Origin Energy to extend the power station’s life beyond its initially projected closure in 2025. Last year, the government indicated a willingness to pay up to $450 million over two years to maintain Eraring’s operation, contingent upon Origin’s participation in the risk-sharing framework.
Under this proposed agreement, taxpayers would have shared 20 percent of any profits made by Eraring, subject to a cap of $40 million.
Conversely, should the power station incur losses, the government would have been responsible for 80 percent of those losses, capped at $225 million annually.
However, Origin informed the state government on Monday of its decision to opt out of the agreement, although it retains the option to join by March 31, 2026, for the final financial year before Eraring’s closure.
As it stands, Origin is scheduled to shut down Eraring on August 19, 2027. This development aligns with broader environmental concerns, as extending the life of coal-fired power stations has been criticized by renewable energy advocates and climate stakeholders due to the significant greenhouse gas emissions associated with coal power.
Former NSW treasurer and energy minister, Matt Kean, had previously warned that extending Eraring's operational life could result in costs to taxpayers as high as $3 billion over two years and could jeopardize the state’s commitment to transitioning toward renewable energy sources.
In response to potential criticisms and commitments to energy reliability, NSW Energy Minister Penny Sharpe emphasized the government's intention to transition to renewable energy while maintaining operational stability.
The government has stipulated that under the temporary agreement, Origin is required to generate at least six terawatt hours of electricity annually—equivalent to the typical output of two of Eraring’s four units—and is expected to preserve the existing workforce and follow a maintenance plan subject to environmental regulations.
The NSW Electricity Infrastructure Roadmap—a comprehensive 20-year strategy aimed at achieving affordable, clean, and reliable energy—continues to progress.
Approximately 35 percent of the state’s electricity supply is now derived from renewable sources.
In a move to bolster this transition, the government has approved several renewable energy projects, including six wind farms, 12 large-scale solar installations, and 14 battery energy storage systems.
Origin Energy, the operator of Australia’s largest such facility, confirmed it will not participate in a risk-sharing agreement with the state government.
Eraring will continue its operations until its scheduled closure in 2027, without the financial arrangement that was proposed by the NSW Labor government.
Upon taking office in March 2023, the Minns government expressed concerns about a potential energy reliability gap, prompting negotiations with Origin Energy to extend the power station’s life beyond its initially projected closure in 2025. Last year, the government indicated a willingness to pay up to $450 million over two years to maintain Eraring’s operation, contingent upon Origin’s participation in the risk-sharing framework.
Under this proposed agreement, taxpayers would have shared 20 percent of any profits made by Eraring, subject to a cap of $40 million.
Conversely, should the power station incur losses, the government would have been responsible for 80 percent of those losses, capped at $225 million annually.
However, Origin informed the state government on Monday of its decision to opt out of the agreement, although it retains the option to join by March 31, 2026, for the final financial year before Eraring’s closure.
As it stands, Origin is scheduled to shut down Eraring on August 19, 2027. This development aligns with broader environmental concerns, as extending the life of coal-fired power stations has been criticized by renewable energy advocates and climate stakeholders due to the significant greenhouse gas emissions associated with coal power.
Former NSW treasurer and energy minister, Matt Kean, had previously warned that extending Eraring's operational life could result in costs to taxpayers as high as $3 billion over two years and could jeopardize the state’s commitment to transitioning toward renewable energy sources.
In response to potential criticisms and commitments to energy reliability, NSW Energy Minister Penny Sharpe emphasized the government's intention to transition to renewable energy while maintaining operational stability.
The government has stipulated that under the temporary agreement, Origin is required to generate at least six terawatt hours of electricity annually—equivalent to the typical output of two of Eraring’s four units—and is expected to preserve the existing workforce and follow a maintenance plan subject to environmental regulations.
The NSW Electricity Infrastructure Roadmap—a comprehensive 20-year strategy aimed at achieving affordable, clean, and reliable energy—continues to progress.
Approximately 35 percent of the state’s electricity supply is now derived from renewable sources.
In a move to bolster this transition, the government has approved several renewable energy projects, including six wind farms, 12 large-scale solar installations, and 14 battery energy storage systems.
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