Eastern Australia faces a heightened risk of blackouts from as early as 2027 amid fresh warnings that the grid is underprepared to manage the planned closure of the nation’s largest coal-fired power station, Eraring, and the surge in rooftop solar power.
Although enough renewables and power lines are now on track to be delivered in time to replace Origin Energy’s giant Eraring generator when it is scheduled to close in 2027, officials are increasingly worried about a lack of infrastructure required to maintain the safe and stable flow of electricity to protect the grid from sudden blackouts.
A turbine at the Eraring coal plant in NSW. Credit: Nick Moir.
NSW Energy Minister Penny Sharpe said the state was “in a race to replace our ageing coal-fired power stations”.
Origin last year struck a deal with Sharpe to delay Eraring’s closure from 2025 to 2027 amid concerns the grid was not ready to handle its exit, but the company may be required to push back its plan once again.
In a report to be released on Monday, the Australian Energy Market Operator (AEMO) says NSW grid owner Transgrid is racing to install new equipment to keep the grid stable, but that equipment is unlikely to be delivered until “at least 2028”.
Sharpe said the NSW government was aiming to speed up Transgrid’s installation of synchronous condensers – grid-connected machines that don’t burn fuel but deliver the same stabilising effects to the system as the spinning turbines of coal and gas plants.
“The NSW government is accelerating the delivery of synchronous condensers by 18 months, and passed legislation to do this,” she said.
To run smoothly, power grids must not only match supply and demand, but also maintain “system security”, including inertia, which comes from the steady frequency that has traditionally been provided by the spinning turbines of gas, coal and pumped hydro plants.
Good system security enables the grid to ride through sudden spikes or lulls in demand, power line faults or power plant breakdowns.
Most of Australia’s coal plants that have provided that system security are scheduled to retire by 2035, while soaring maintenance costs and competition from renewables are driving owners to speed closure plans. CSIRO and AEMO have found that a renewables-dominated grid is the cheapest way to replace them.
While the enormous volume of power generated from more than 4 million rooftop solar systems across the nation is helping slash daytime prices, the electricity supplied lacks system security services and is adding to the challenge of running the grid.
AEMO has warned that the loss of inertia and system strength from the scheduled closure of Origin’s Eraring coal plant in 2027 would create a heightened blackout risk in NSW. Transgrid’s new synchronous condensers were not likely to be operational in time, “even though they are being fast-tracked”, AEMO said.
Transgrid said it recognised the risk of system strength gaps between the scheduled retirement of Eraring and the installation of its synchronous condensers. It said it had previously advised that extra coal, gas or hydropower might need to be contracted to meet minimum system strength requirements.
“Transgrid will continue to work with AEMO, the NSW government and the broader electricity industry to mitigate the risk of any unmet gaps in system strength and ensure a secure, stable energy network for all consumers,” a spokesman said.
A spokesperson for Origin Energy said it would consider a range of scenarios when deciding on Eraring’s closure, but its “base case” was still to close it in 2027. Origin’s deal with NSW includes an option to extend Eraring until 2029 if it is still needed.
“It is up to Origin to make a good decision, which we’ll do with our customers and energy security for the people of NSW in mind,” the spokesperson said. “Origin has always acted responsibly in this regard, and the community should have confidence we will continue to do so.”
AEMO chief executive Daniel Westerman said new investments in technologies including condensers and large batteries were urgently needed to address risks identified in Queensland from next year and NSW from 2027. He said AEMO had been foreshadowing system strength issues in NSW emerging from Eraring’s closure every year since 2021.
“AEMO will continue to work collaboratively to signal and support the required investments and reforms needed to maintain system security,” he said.
Federal Energy Minister Chris Bowen said significant increases in large-scale and home batteries was forecast for the grid.
“The energy market operator calls out Cheaper Home Batteries and our Solar Sharer offer as policies that won’t just deliver lower bills for households but also help secure our modern, reliable grid,” he said.
More than 120,000 installations have been delivered since June under the government’s Cheaper Home Batteries program.
More gas power plants are needed to back up renewables, alongside batteries. The government is already under pressure from the ACTU to impose a 25 per cent tax on all liquefied natural gas exports in a bid to raise extra revenue and to encourage producers to supply more gas to the domestic market.
On Sunday, the Greens said they would not support any plan to boost local gas that required federal government support, arguing instead exporters should face a 25 per cent tax.
Greens resource spokesperson Steph Hodgins-May said the money raised by such a tax should be used to compensate households for the surge in prices they have endured over the past three years.
“Since gas exports began, prices have tripled,” she said. “Gas corporations created this crisis, and Australian households have paid for it with no compensation.”
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