A delay to the closure of Origin Energy’s Eraring coal power station has been recommended by energy expert Cameron O’Reilly.
The recommendation came from a review of the New South Wales energy transition plan, part of which is the intention to close coal power stations as soon as possible with the aim of moving the state towards renewables.
It comes as NSW increases its coal royalties to 10.8 per cent for open cut mining, 9.8 per cent for underground mining and 8.8 per cent for deep underground mining.
The previous rates stood at 8.2, 7.2 and 6.2 per cent respectively.
NSW Natural Resources Minister Courtney Houssos said the decision “struck the right balance”.
“The Minns government is committed to ensuring the ongoing stability of the mining sector, while rebuilding essential services’ for the people of NSW,” she told the Australian Financial Review.
Treasurer Daniel Mookhey told reports it the decision would help clear the state’s budget. It is the first time coal royalties have been changed in 14 years.
“It’s important to recall that the last time royalty rates in New South Wales changed was just after the iPhone 3 was introduced. That’s an eon ago, market conditions have clearly changed,” he said.
“The existing coal royalty system is out of date. That’s why we are modernising these rates to ensure that the people of New South Wales do indeed share in the wealth that their resources create.”
Origin has announced the plant will close as soon as 2025, which O’Reilly warned would risk putting too much pressure on state resources in the push to fill the gap in energy demand.
NSW Energy Minister Penny Sharpe said in a statement that the government will take necessary steps to keep the power station operating as long as necessary.
“We will engage with Origin about the future,” she said in a statement reported by the ABC.
“We’re beefing up the energy security target monitor that will be working in New South Wales’ interest with coal fired power stations as they seek to exit to make sure we have all the information we need to smooth the bumps of the transition as much as possible for households and for consumers.”
The Australian Energy Market Operator (AEMO) released a report last week warning of the need to guard against “reliability gaps” forecast due to the speed of coal power station closures.
“This year’s report highlights the pace of Australia’s energy transition and the urgency needed to deliver new investment to ensure reliable, affordable and cleaner energy for consumers,” AEMO chief executive officer Daniel Westerman said.
“Over the 10–year outlook, we continue to forecast reliability gaps, which are mostly due to the expectation that 62 per cent of today’s coal fleet will retire by 2033.”