A deal underwritten by taxpayers to keep Australia’s largest power station firing has taken a turn.
Origin Energy has decided not to trigger the first year of the taxpayer-backed risk-sharing deal for the ageing coal-fired facility in the Hunter Valley region in NSW.
This means Origin will assume responsibility for the operations of Eraring Power Station, regardless of whether it turns a profit or makes a loss.
The 2.8GW power station was due to close in August but that was delayed for two years under a deal struck in May with the NSW government to avoid potential power shortages and price spikes.
The state faced reliability risks due to delays in the rollout of battery projects, the Australian Energy Market Operator had warned.
“This short, temporary agreement with Origin provides certainty while we deliver more renewable energy and storage to replace ageing coal-fired power plants,” NSW Energy Minister Penny Sharpe said on Tuesday.
Origin can still opt-in to the deal for the 2026 financial year, which could result in it paying up to $40 million to the government if the plant delivers a profit.
It could also cost taxpayers up to $225 million.
Treasurer Daniel Mookhey said the decision by Origin to assume responsibility for the power station’s operations was a win for taxpayers.
“We are protecting families and businesses from bill shock and power outages while the energy transition continues – without it costing them a cent this financial year,” he said.
Eraring, on the shore of Lake Macquarie south of Newcastle, was privatised in 2013 under the former coalition state government, with Origin paying $75 million to take over the ageing asset.
That sale had necessitated the deal to keep the plant in operation, Mr Mookhey said.
Origin must permanently de-register all four of Eraring’s power units from the national grid by May 2029. It currently plans to close the station in August 2027.
Energy policies are shaping as a key feature of the federal election campaign.