The energy landscape in Australia is undergoing a significant transformation as the country shifts from coal-fired power plants to renewable energy sources. This transition is crucial for achieving environmental sustainability and reducing carbon emissions.
One notable example is Origin Energy’s plan to shut down the Eraring Power Station, the country’s largest coal-fired power plant. This blog will explore the necessity of closing coal-fired power plants, the general steps required for such a shutdown, and the importance of grid compensation during this transition.
Why Close Coal-Fired Power Plants
Coal-fired power plants have “generated” a variety of reasons to warrant their closure.
Coal-fired power plants are major contributors to carbon emissions, air pollution, and environmental degradation. In shutting down these plants, Australia can significantly reduce its carbon footprint, improving air quality and public health. Transitioning to renewable energy sources such as wind, solar, and hydroelectric power is essential for mitigating climate change and preserving natural ecosystems.
The economic viability of coal-fired power plants is declining due to increasing operational costs, stringent environmental regulations, and the growing competitiveness of renewable energy. Investments in renewable energy infrastructure are becoming more attractive, offering long-term economic benefits, job creation, and energy security. Closing coal-fired power plants aligns with global trends and supports the development of a sustainable energy economy.
Renewable energy systems have considerably improved for increased efficiency and cost-effectiveness. Innovations in energy storage, smart grids, and energy management systems are enhancing the reliability and integration of renewable energy into the grid. These technological improvements facilitate the transition away from coal-fired power plants, ensuring a stable and sustainable energy supply.
How to Shut Down a Coal-Fired Power Plant
Planning and Regulatory Compliance
The first step in shutting down a coal-fired power plant is thorough planning and obtaining necessary regulatory approvals. This involves engaging with government agencies, industry stakeholders, and the community to ensure compliance with environmental and safety standards. Detailed plans outlining the shutdown process, environmental remediation, and workforce transition must be prepared and submitted for approval.
Workforce Transition
Closing a power plant requires careful planning to support employees through the transition, through retraining programmes, job placement services, and financial assistance. Engaging with unions and employee representatives is crucial to address concerns and ensure a smooth transition for the affected workforce.
Decommissioning and Dismantling
The decommissioning process involves safely shutting down the plant’s operations, including ceasing coal deliveries, draining and cleaning equipment, and safely disposing of hazardous materials. Dismantling the plant includes removing structures, machinery, and infrastructure. This process must adhere to strict safety and environmental regulations to prevent contamination and ensure public safety.
Environmental Remediation
Post-closure, the site must undergo environmental remediation to address any contamination and restore the land for future use. This involves soil testing, groundwater monitoring, and implementing measures to mitigate any environmental damage caused by the power plant’s operations. The goal is to rehabilitate the site, making it suitable for new developments or returning it to its natural state.
Grid Compensation and Energy Security
One of the critical challenges in closing a coal-fired power plant is ensuring grid stability and compensating for lost power, especially when that plant generates a considerable amount of power for the grid. Grid compensation involves integrating alternative energy sources, upgrading transmission infrastructure, and implementing energy storage solutions to maintain a reliable power supply. This is essential to prevent potential outages and ensure a smooth transition to renewable energy.
Example: Origin Energy Sunsetting Eraring
Eraring Power Station, located in Eraring, NSW, is Australia’s largest coal-fired power plant, with a capacity of 2,880 megawatts. Operated by Origin Energy since 1984, it has been a significant contributor to the state’s electricity supply. In line with Australia’s commitment to reducing carbon emissions and transitioning to renewable energy, Origin Energy announced in 2022 that it was planning to shut down the station by 2025 instead of 2032.
However, in May 2024, Origin struck a Generator Engagement Project Agreement (GEPA) with the NSW government to hold off the closure for as long as two years. The GEPA will now set the closure to 19 August 2027. The company also submitted a revised closure notice to the Australian Energy Market Operator.
Steps in Shutting Down Eraring
Strategic Planning and Consultation
Origin Energy had engaged in extensive planning and consultation with government bodies, regulatory agencies, and community stakeholders to outline the shutdown process. This includes addressing environmental concerns, workforce transition plans, and strategies to ensure grid stability.
In line with the planning and consultation, Origin is allowed to invoke the GEPA in seeking state compensation for Eraring’s operations for FY26 and FY27, provided the company formally notified the government of seeking GEPA assistance in March before the coming fiscal year. The company will endeavour to keep Eraring in full condition to generate six terawatt-hours for the two fiscal years. The government support is aimed at easing potential losses of up to $225m per annum, but Origin will remit $40m of any profits to the government.
Workforce Support
Origin Energy is committed to supporting its employees through the transition, by way of retraining programmes, career counselling, and job placement services to help workers find new employment opportunities within the renewable energy sector or other industries. The company is also committed to continue investing on the $5 million Eraring Community Fund, which was designed to support Lake Macquarie communities that might be affected by the loss of income from station staff potentially displaced in the closure.
The support to help the Eraring staff may be vital. ABC’s Mayeta Clark wrote after Origin’s closure announcement in 2022 that aside from its 240 regular workers assigned to Eraring (many of which have been there for 20 years), there are also 200 contract hires and 500 techs who visit the complex every month for maintenance runs. Two-hundred fifty miners are at Myuna Colliery in Wangi Wangi, which is Eraring’s only coal source. Speaking to Clark, Mining and Energy Union official Mark McGrath said he had negotiated with Eraring officials to partner with the MATES in Energy suicide prevention programme in avoiding the worst.
The staff are already viewing the unemployment situation in AGL Macquarie Power Stations with much concern. AGL closed down the Liddell plant in April 2023 after 52 years, and is eyeing a shutdown of Bayswater sometime between 2030 and 2035.
Decommissioning Process
The decommissioning of Eraring Power Station will follow a phased approach per National Energy Market rules. Initial steps involve safely shutting down operations, including ceasing coal deliveries and draining equipment. Hazardous materials will be managed and disposed of in compliance with environmental regulations. The GEPA stated that Origin will have full rights to manage the timeline for closing down the Station’s four power units, with the expected decommissioning completed by April 2029.
Environmental Remediation
Origin Energy will conduct thorough environmental remediation to address any site contamination. Soil and groundwater testing will be performed, and measures will be implemented to restore the land. This process aims to rehabilitate the site for potential future use or return it to its natural state.
Ensuring Grid Stability
A critical aspect of the Eraring shutdown is ensuring grid stability and compensating for the lost generation capacity. Origin Energy is already planning ahead for this.
A commercial battery complex, the Eraring Battery Energy Storage System (BESS), is currently under development near the station; Phase I, a 460MW facility with max dispatch duration of two hours, is slated for activation in late 2025. Phase II, boasting 240MW with four hours’ dispatch , is projected to go on-line in early 2027. Taken together, Origin is expecting them to have a power output of over two gigawatt-hours, but is also studying the possibility of building a “Phase III,” designed to help the Eraring BESS have a consistent dispatch time of four hours.
Benefits of Shutting Down Eraring
Turning off the Eraring Power Station may have a raft of benefits.
Environmental Benefits
Shutting down Eraring Power Station will significantly reduce carbon emissions and air pollution, contributing to Australia’s climate goals and improving public health. In rationalising the closure, NSW officials said it will go some way to meeting NSW’s emissions targets by 2030.
Economic Benefits
The transition to renewable energy will create new job opportunities, stimulate economic growth, and reduce the long-term costs associated with coal-fired power generation. Investments in renewable infrastructure will drive innovation and enhance energy security. NSW Premier Chris Minns said the alternative to shutting down Eraring in 2027 was to “lights out” in 2025, in a time of the state’s strong progress to net-zero.
Technological Advancements
The closure of Eraring will accelerate the adoption of advanced renewable energy technologies, improving the efficiency and reliability of Australia’s energy grid. This will position Australia as a leader in renewable energy innovation.
Conclusion
The closure of coal-fired power plants such as Eraring marks a significant step towards a sustainable energy future for Australia. The environmental, economic, and technological benefits of this transition are substantial. This move not only aligns with global trends but also positions the country as a pioneer in the fight against climate change, leading the way to a cleaner and more sustainable energy landscape.
DISCLAIMER: This article is for informational purposes only and does not supersede business advice. The information presented is based on the most accurate data available at the time of writing. AVANTE PARTNERS has no relationships with any government authority or energy company and does not have business interests in any energy generation facility.
This article contains mentions of suicide. If you or a loved one are experiencing serious mental distress over job security, please contact Lifeline (131114) or the Suicide Call Back Service (1300 659 467).
