SYDNEY – Australia is considering extending the life of Origin Energy’s Eraring coal fired power plant, the country’s largest, the New South Wales (NSW) state minister for climate change said on Tuesday.
Origin said last year it would shut Eraring seven years ahead of schedule in 2025, in part because falling power prices had made it difficult to turn a profit.
But surging power prices and a growing worry that renewable energy is not coming online fast enough to offset retiring fossil fuel plants have combined to revive the case for delaying the Eraring’s closure.
New South Wales Minister for Climate Change Penelope Sharpe said a government-commissioned report had made the case for extending Eraring’s life and the government would speak with Origin about the plant‘s future.
“The checkup makes it clear that the case for Origin Energy to extend its timeframe for phasing out Eraring is there,” Sharpe said at a news conference.
“We accept the recommendations … We will engage with Origin about the future.”
Eraring was a “profitable asset” and Origin had a strong commercial interest to defer its closure, the NSW government said in its response to the report.
Origin shares traded ex-dividend on Tuesday and fell 2.8% in morning trade. The company in March agreed to a A$15.35 billion ($9.86 billion) takeover offer from a consortium led by Canada’s Brookfield that is expected to close in early 2024.
Brookfield declined to comment.
In a statement, Origin acknowledged the recommendations and said it would work with the state government “to find a path forward that can help navigate the economic challenges facing the plant and avert any risk to the reliability of electricity supply in the state.”
The report, commissioned in May, also recommended government improve the grid to allow more low-emissions generation and consider investing in more gas storage to support the seven gas plants expected in the state by 2024.
NSW accepted in part or full 47 of the report’s 54 recommendations, according to Sharpe. Three were already underway and four were rejected. – Reuters