Origin Energy reworks Eraring coal power stalwart for final years

An $80 million maintenance overhaul and an increased ability to power down when renewables swamp the market have set up Origin Energy’s giant Eraring coal power station to battle through its final years before the NSW Central Coast site transforms into a battery storage hub.

Originally run around the clock at near-constant levels, the 2880-megawatt generator – the country’s biggest – now chases the market, powering up or down to suit price swings in the National Electricity Market (NEM) that can fluctuate every five minutes.

“If the market changes, we change,” says plant control room shift manager Jonathan Lawless at the site, 40 kilometres south of Newcastle on the shore of Lake Macquarie, where his team is keeping an eagle eye on wholesale prices and supply and demand across the NEM on a large screen.

“It’s very dynamic, very flexible.”

Soaring generation from both rooftop solar and solar farms through the day can cause wholesale power prices to slump towards zero or below, often for several hours – something unheard of in the early years of the NEM in the late ’90s and early 2000s. That has placed enormous financial stress on baseload coal plants, even though their output is still critical to keep the lights on at times.

Eraring output hit a five-year high in 2023-24 despite steadily increasing renewable generation, as wind and solar output hit multi-year lows early this winter.

After the deal struck with the NSW government in May to delay Eraring’s closure for 24 months to August 2027, Origin is working to get the generator through its last few years without racking up mountains of losses. The plant still supplies 22-28 per cent of NSW’s power.

The cost of the overhaul of one of Eraring’s four generating units would have been “much less” had Origin stuck with its planned closure date in 2025, requiring a reduced scope of work, says Origin group manager, coal asset operations Anthony Ham.

As it is, during a visit to the 1100-hectare site on Tuesday, the typical daily workforce of 400 staff and contractors was up to about 900, swelled by crews of welders, boilermakers, electricians and even underwater divers inspecting and cleaning parts and systems, making repairs as required.

Another 187 are working on an adjacent large battery project that will underpin the site’s future when the coal plant finally closes, using its connections to the grid to provide storage to smooth weather-dependent renewables as well as frequency and voltage services.

Asset services manager Antony Cotic says maintenance has increased to maintain reliability as the generating units are run more dynamically, putting more stress on parts.

“Twenty years ago ... they were baseload, trying to sit at 660 megawatts 24-7, no matter what was happening with the sun and wind ... Pretty much happy days,” Cotic says.

“These days ... we’re very much following the market.”

About two weeks ago, Origin finally received approval from the Australian Energy Market Operator to reduce the run rate at each unit to 180 MW when needed, just 25 per cent of their current maximum capacity of 750 MW.

That ability to power down as low as possible has become critical as wholesale power prices plummet during daylight hours. In the June quarter, when solar and wind power were subdued, wholesale prices across the NEM were zero or negative for 7 per cent of the time, but the figure reached as high as 22 per cent in South Australia in June last year.

At about 3pm on Tuesday, however, with NSW spot prices at about $37 a megawatt-hour as solar passes its peak, Eraring has three units running at about 320 MW. The fourth, Unit 3, is offline for maintenance and its screens in the control room are blank.

Cotic says powering units down well below their 720 MW maximum capacity is now “pretty normal”, as required by the transforming market.

Lawless recalls that when he joined in 2006, the generator would typically run flat-out through the day and evening peak, power down moderately overnight and ramp up ahead of the high-demand breakfast period.

Now, generation is typically low during the day, increasing for the evening peak when the sun has faded and running constantly until past the early morning peak.

“We’re effectively 180 degrees out from where we used to be,” he says.

Approval from AEMO to run the Eraring units at a lower level came after two years of work involving 500 hours of testing at one unit.

“We had to prove to AEMO that the units are still stable,” Lawless says, spelling out the importance of avoiding “AEMO’s nightmare” scenario where a unit trips, triggering a domino effect on generators across the state.

Whether Eraring will definitely close in August 2027 remains uncertain, with Origin having the option of keeping units running until April 2029, but without the supporting NSW government deal.

That controversial arrangement will compensate Origin for 80 per cent of any losses at Eraring up to a $225 million a year. In return, it shares one-fifth of any profits up to $40 million a year. The deal is conditional on a set minimum output level.

Ahead of the shutdown, Origin’s transition program for its staff at Eraring is readying 198 workers for their changed life and careers. The battery project will require only three to five workers, compared to 228 Origin employees at the site now and typically about 200 contractors.

The first $600 million stage of the Eraring battery, involving 460 MW of output and two hours of storage, should start up in late 2025. The $450 million second stage, involving 240 MW of output and four hours of storage, is due online in early 2027. A third phase would increase the storage of the first plant also to four hours, in line with the market’s increasing need for longer duration storage.

While the battery project points to the future importance of the site, for Lawless, the public’s lack of understanding about the continuing role that the coal power plant plays is frustrating.

“The vast majority of people are proud to work here,” he says. “The lack of understanding in the wider community is worrying