Essay by Eric Worrall
First published JoNova; But the financial model which demonstrates coal is cheaper is a state secret.
NSW confirms Eraring closure delay driven by fear of pre-election price shocks
Giles Parkinson
Aug 6, 2024The NSW state Labor government has confirmed that its controversial decision to delay the closure of the country’s biggest coal fired power generator at Eraring was primarily driven by concerns over a possible jump in wholesale electricity prices.
The 2.88 gigawatt (GW) Eraring facility on the central coast was due to close on August, 2025, but under an underwriting deal with the state government which could be worth up to $450 million, Origin Energy will now keep at least two units open until August, 2027, a few months after the next state election.
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But the failure of Eraring owner Origin Energy to build any new capacity in NSW before the 2025 closure, and delays caused by planning, connection, and commissioning holdups to other projects forced the state government’s hand.
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The full report by Endgame remains commercial in confidence, and so apparently the full modelling and the assumptions it was working on won’t be released. That’s unfortunate, because it is pretty clear that the modelling has already been mugged by reality.
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It means that the wholesale price benefit is more likely to be less than $3 billion under the deal actually negotiated, and it is not clear that those benefits will actually occur.
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If one single coal plant can shave a billion dollars per year over 3 years ($3 billion until 2027), imagine how much money two coal plants could save.
The models also suggest keeping the coal plant open will accrue just over a billion dollars in negative benefits, presumably because CO2 bad. But given all the recent news about global greening, I think we can safely conclude that model based claims that CO2 has a net negative impact on human wellbeing are not backed by observations.
One curious omission caught my eye, Renew Economy reporter Giles Parkinson somehow forgot to ask Origin Energy why they have not invested all that profit from running Eraring coal plant into the expected renewable and battery backup capacity which is supposed to replace Eraring coal plant. Perhaps readers can propose a theory.
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