Origin Energy has announced that its NSW Hunter region Eraring power station, the largest coal-fired generator in Australia, could close in 2025, seven years earlier than planned.
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The company outlined the new closure date when presenting its half-yearly results to the Australian Stock Exchange on Thursday.
Origin's ASX statement said it would "progress plans" to replace the 2880-megawatt plant with 700MW of battery storage at Eraring.
The company flagged a closure date of 2032 for Eraring, in Lake Macquarie, in May last year, but its statement to the ASX said "growth in renewable energy challenges Eraring's viability".
Eraring provides about a quarter of NSW's electricity and employs about 1000 workers directly and indirectly.
"We have carefully weighed Eraring's future for some time, as it has become increasingly clear that the influx of renewables has changed the nature of demand for baseload power, undermining the economics of the plant," Origin chief executive Frank Calabria said in a statement on the company's website.
"We acknowledge that this will be challenging news for our people, suppliers and the local community, and we commit to supporting them through any transition.
"While the energy transition brings change, it also presents opportunities for Origin to continue to invest in cleaner, reliable and affordable energy."
The ASX statement said new capacity additions outlined under the NSW government's Electricity Infrastructure Roadmap should "more than cover" the firming capacity of Eraring.
The news comes a week after AGL announced that it would bring forward the closure of Bayswater power station from 2035 to "no later" than 2033 and possibly 2030.
AGL will close Liddell power station next year, meaning the Hunter's three main coal-fired generators could all be shut within eight years.
"Potential Eraring closure is a significant step in progressing the decarbonisation of our business and achieving our long-term ambition to be net-zero emissions by 2050," Origin said in its ASX statement.
The company said it would focus on retraining and redeploying staff as part of a transition plan.
NSW Treasurer and Energy Minister Matt Kean said on Thursday morning that he was "disappointed" with Origin's decision but vowed the state would have a new 700MW "network" battery to stabilise electricity supply by 2025.
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Lake Macquarie MP Greg Piper said the shock announcement would deliver "far-reaching and major implications" in the Hunter.
"First and foremost, there will be many hundreds of local workers and their families rightfully concerned about their futures this morning. My own son is among them," he said.
"This decision does not impact on Eraring employees alone but those in associated industries, including Centennial Coal, which provides coal to Origin's Eraring operations.
"This is a day we knew was coming, but is now coming way sooner than was thought."
He said Origin executives had confirmed the earlier closure of Eraring would not affect the company's funding of a new sport and recreation centre at Morisset.
"Origin has assured me that it remains entirely committed to staying on the Eraring site to become a renewable energy powerhouse and also remains committed to funding the new sport and recreation centre," he said.
"It must also remain committed to dealing with coal legacy issues such as contamination and coal ash as part of the transition process."
The ASX statement said Origin had set aside $240 million for "restoration and rehabilitation" of the Eraring site.
Mr Piper said the earlier closure would have positive effects on the Lake Macquarie environment.
"Turning the pumps off and stopping the thermal input from the cooling system will see change in the local lake environment, for example, and these issues must be included in transition plans," he said.