Following the announcement by Vales Point that it may extend the life of its Eraring plant to 2033, a new report by independent public interest think tank Climate Energy Finance (CEF) shows that the coal power station can be closed on-time in 2025, while securing supply, putting downward pressure on prices and driving decarbonisation of industry.
Simon Corbell, CEO of the Clean Energy Investor Group (CEIG) said delaying the closure of Eraring creates significant downside risk for investors.
“Investors have been making decisions on new clean energy projects based upon the expected closure of Eraring in 2025, changing the date will mean investors will be less confident about future announced closures, and will have less confidence when it comes to making future investment decisions in NSW.”
The Lights Will Stay on: NSW Electricity Plan 2023-2030 report finds that Eraring’s closure can be achieved by continuing the current run-rate of 1.2 gigawatts (GW) annually of NSW rooftop solar installs, and front-end loading at least 1.2GW annually of utility scale wind and solar within the state to 2030.
This would replace the electricity generation capacity equivalent of 2.88GW at Eraring, and the 1.32GW Vales Point coal power station, earmarked for closure in 2028/29 (when it will be an entirely end-of-life 50-51 years of age, despite recent commentary from its owners about a possible extension).
The report’s findings are supported by the CEIG, representing renewable energy investors with approximately 11GW of installed capacity across roughly 70 power stations and a portfolio value of about $24 billion; specialist energy consultancy Nexa Advisory; and community advocacy groups.
CEF’s analysis shows that there are more than enough renewable energy projects in the investor pipeline and that capital is ready and available, assuming grid connection and approvals processes can be expedited to lock in both early final investment decisions by investors and timely construction.
Delaying Eraring’s closure would require NSW to pay at least an estimated $200 to 400 million per annum in public subsidies to its operator, Canada’s Brookfield.
Delay would also undermine both the NSW government’s climate policy, and the Federal Government’s 82 per cent by 2030 renewables target and 43 per cent emissions reduction target.
The report calls on NSW Energy Minister Penny Sharpe to lift NSW’s 2030 renewables target to at least 70 per cent and:
- Match the Federal government’s program to support rooftop solar, storage and energy efficiency upgrades to 60,000 social housing homes with funding from the $1bn NSW Energy Security Corporation, immediately alleviating energy poverty for those most vulnerable.
- Accelerate the rooftop solar and batteries program rollout on 21,700 buildings across 2,200 public schools.
- Move the Federal Government to lift the Small-scale Renewable Energy Scheme (SRES) cap from 100kW to 1,000kW to speed commercial and industrial installs of distributed solar (helping deliver half of new capacity needed from DER with no grid delays).
- Accelerate approvals for utility-scale renewable energy projects that must be built rapidly ahead of closures, focusing on the strategic prioritisation of plants able to gain grid connection.
- Accelerate and upscale NSW Renewable Energy Zone (REZ) tenders and long term energy service agreements (LTESA) tenders, providing revenue certainty for private investment in new renewables.
- Flood the market with an underwritten low cost $25-35/megawatt hour (MWh) electricity floor price and minimum volume offtakes for new utility solar, de-risking these projects for investors; and expedite approvals to bring them online within 2-3 years.
- irect Transgrid and Essential Energy to reassess their grid transmission and distribution capacity constraints, in light of PowerLink in Queensland finding that 10 gigawatts (GW) of new RE can be added even before major grid transmission projects are completed.
Report author and CEF director Tim Buckley said: “NSW has led Australia on the development of its REZ roadmap, but we know grid transmission, like pumped hydro storage, is slow to get community buy-in and then be built.
“Meanwhile, the existing grid has plenty of spare capacity to accommodate within-state distributed rooftop solar and behind-the-meter storage in homes and businesses, as well as infill utility-scale wind and solar located strategically across NSW.”
Stephanie Bashir, CEO and founder of Nexa Advisory said the review commissioned by the NSW energy minister will show that there are sufficient renewable energy generation and storage projects in the pipeline to replace coal-fired power stations on time.
“We now need to prioritise and accelerate the project connections and statutory approvals, while maintaining rigor, for already committed and anticipated generation and storage projects. This would add a further 4.3 GW of firmed low carbon generation to the NSW power system.
“Our research also shows that bolstering firming auctions through the LTESA or Federal Government Capacity Investment Scheme and bring on additional ‘insurance’ capacity earlier will be critical.
“Taking action now would mean Eraring can still close in August 2025 as scheduled. Lack of accelerated build out of generation, storage and transmission right now has the potential to delay not only this closure, but others too.
“That will put power affordability, reliability and security at risk. And Australia will fail to meet its emissions targets.”
