The Case for Closing Eraring in 2027
Eraring is unreliable – extending its life beyond 2027 is a ‘lose lose’.
Nexa Advisory has analysed the performance of Australia’s largest coal-fired power station – Eraring Power Station and considered the likely impact of its unreliability on the consumers of electricity in New South Wales.
We have shown that Eraring has high downtime and frequent unplanned outages, with an unplanned outage rate of 6 per cent in 2024. Each of Eraring’s units have experienced an average of about two months of downtime annually and have operated at a low capacity for over half the time in recent years. Additionally, Eraring exhibits poor price responsiveness and limited technical ability to ramp generation up and down in response to demand.
These outages and poor performance have impacted Eraring’s availability when needed most.
Despite this poor performance, in May 2024, the New South Wales Government negotiated an extension and potential underwriting of Eraring’s operation to August 2027. This could cost New South Wales taxpayers up to $450 million.
Keeping Eraring open beyond its use-by date is clearly not a feasible solution. To avoid another extension and reduce the state’s reliance on this unreliable generator, the New South Wales Government must support alternative solutions outlined in this report to deliver secure, reliable and affordable electricity for New South Wales consumers.
There is a strong pipeline of renewable energy projects in New South Wales which will replace the energy generated by the 2,880 MW Eraring in the coming years. Over 4.5 GW of battery storage, 5.8 GW of solar and 4.6 GW of wind projects have received state planning, development and/or environmental approvals and can be accelerated to support the state’s clean energy transition. This is part of a broader pipeline of proposed projects – including 16 GW of battery storage, 17 GW of solar and 27 GW of wind projects – which can also be accelerated to deliver additional capacity and avoid further reliability concerns in the future.
In light of this analysis, Nexa Advisory makes the below recommendations to the New South Wales Government on actions it should take to mitigate these risks and issues, and the ongoing cost to taxpayers.
- Lean into new capacity build – allowing the CIS or LTESA tenders for generation capacity to be brought forward/expanded in response to disorderly coal-fired power station closures.
- Accelerate near-term project approvals – this would provide greater investor certainty and reduce time to financial close and commissioning for the 44 GW of solar and wind and 16 GW of large-scale battery projects currently proposed across New South Wales.
- Bolster firming procurement in advance – accelerating firming procurement – such as through the Firming LTESA mechanism ahead of identified breaches – rather than providing ongoing support for existing coal-fired power stations such as Eraring.
- Look beyond the Renewable Energy Zones – this would also potentially encourage innovative projects, which minimise the impact on the network and other
projects, such as contestable private transmission, ‘virtual’ transmission or co-located generation and load. - Enable critical transmission lines – expediting delivery of priority transmission projects
- Leverage the untapped potential of Consumer Energy Resources – including the estimated 7 GW of potential capacity across Commercial and Industrial rooftop solar installations and accelerating the deployment of small-scale storage and Virtual Power Plants (VPPs).
Regardless, and as a matter of urgency to provide certainty for investors, the New South Wales Government must provide transparency and certainty on the closure date of Eraring.
Read the full report here: Nexa Advisory – The Case for Closing Eraring in 2027
