NSW response to closure of Eraring Power Station
Ensuring affordable and reliable electricity for NSW energy consumers and supporting jobs is the focus of the NSW Government’s response to Origin Energy’s announcement of their intention to close the Eraring Power Station in 2025.
The NSW Government has developed a comprehensive plan to ensure that NSW continues to have reliable and affordable electricity following the closure of the Eraring Power Station.
As the world moves to decarbonise, a range of new industries will emerge, including in renewable energy manufacturing, green steel, green ammonia and green hydrogen. The NSW Government is committed to capturing the job opportunities created by these new industries within the State.
The NSW Government has announced a comprehensive plan to support up to 3,700 jobs in future industries that includes an estimated:
- 500 extra jobs from a $250 million investment over five years for initiatives to boost locally manufactured content for the renewable energy sector such as wind towers, electrolysers and batteries
- 500 extra jobs from a $300 million investment over 10 years to expand the New Low Carbon Industry Foundations element of the Net Zero Industry and Innovation Program. This will help build the state’s clean industry base, in particular the green hydrogen industry.
- 2,700 direct construction jobs associated with the fast tracked delivery of critical transmission infrastructure needed to connect new sources of generation, including the Central West Orana Renewable Energy Zone (REZ), the New England REZ and Hunter Transmission Project. This is on top of the 1,200 jobs associated with the construction of Hume Link.
NSW is expected to attract at least $32 billion of investment in new energy infrastructure by 2030, including in new transmission, solar, wind, storage and firming projects through the Electricity Infrastructure Roadmap, as well as significant investment in green hydrogen and other renewable energy projects. This creates a big opportunity for NSW to locally manufacture content for the renewable energy sector, creating new jobs and opportunities for workers across the State.
To capture these job opportunities, the NSW Government will establish a $250 million Renewable Manufacturing Fund. This Fund will make strategic co-investments with the private sector to establish and expand local supply chains for renewable energy content, which is expected to create up to 500 new jobs.
This funding builds on the work of the NSW Renewable Energy Sector Board to develop a plan for NSW’s renewable energy sector which maximises the use of locally produced and supplied goods and services, employment of suitable qualified local workers and opportunities for apprentices and trainees. The Fund will take advantage of opportunities identified by the Renewable Energy Sector Board to set up or expand local manufacturing sites, such as in wind tower fabrication, electrolyser production or battery assembly.
The Fund will also play an important role in securing local, reliable supply chains for critical renewable energy infrastructure and components, making sure NSW has access to the equipment it needs to modernise its electricity system.
Grants and funding will be awarded through competitive processes.
The Electricity Infrastructure Roadmap will provide NSW industry and businesses with some of the cheapest, cleanest electricity in the world. This provides NSW a competitive advantage to use this electricity to produce new, low carbon products, including clean fuels, chemicals and materials.
To accelerate these new industries, the NSW Government will invest a further $300 million in the New Low Carbon Industry Foundations element of the Net Zero Industry and Innovation Program to build the State’s clean manufacturing base using new, clean technologies such as green hydrogen, cement, ammonia and steel production.
The new funding will help to accelerate the roll out of the State’s new industries, in particular projects in NSW Clean Manufacturing Precincts, the Hunter Hydrogen Hub and the Illawarra Hydrogen Hub, and is expected to support up to 500 new jobs. Support will break down barriers to incentivise investment at scale, reducing costs through coordination and shared strategic infrastructure for hydrogen and other technologies to build clean manufacturing ecosystems.
Further information on the Net Zero Industry and Innovation Program can be found here.
The Transmission Acceleration Facility will play an important role in fast tracking the delivery of critical transmission infrastructure. The Facility will be used to undertake development activities to accelerate key transmission projects, including the Central-West Orana Renewable Energy Zone, the New England Renewable Energy Zone and the Hunter Transmission Project, and is expected to help create 2,700 direct construction jobs across the State.
To make sure NSW continues to have reliable energy supply following the closure of the Eraring Power Station, the NSW Government will install a 700MW/1400MWh grid battery. This battery - called the ‘Waratah Super Battery’ - will be the largest network standby battery in the Southern Hemisphere. The Waratah Super Battery, together with other minor transmission upgrades, will allow Sydney, Newcastle and Wollongong consumers to access more energy from existing electricity generation.
Currently, at peak times Sydney, Newcastle and Wollongong consumers are not able to access all the existing generation capacity available to the State because of transmission constraints.
Electricity supply to Sydney, Newcastle and Wollongong comes through a number of transmission lines from the north, west and south of NSW. These lines connect electricity consumers to electricity generation. Transmission lines have capacity limits on how much energy they can safely carry at any one time. Currently, some of this capacity is kept in reserve to ensure the line stays within its technical limits in case there is a shock to the system, such as from a lightning strike or bushfire.
The Waratah Super Battery will allow this reserve transmission capacity to be freed up and used to transfer additional energy to consumers from existing generation. It does this by acting as a ‘shock absorber’ for the electricity grid, keeping the transmission system within its technical limits if there is an energy shock.
NSW has the strongest reliability standard in the country – the Energy Security Target – which aims to have sufficient firm capacity to meet the State’s energy needs even if the two largest generating units are offline during a one-in-ten year peak demand event.
The Australian Energy Market Operator (AEMO) has advised that the planned additional transmission capacity – including the announced battery - will give the state access to enough electricity generation to meet the Energy Security Target at the time Eraring closes.
The projected changes in firm rated (or equivalent) capacity including and leading up to the closure of Eraring Power Station, and how this meets the Energy Security Target, are set out in the chart below (click image to enlarge):
To keep downward pressure on prices, the NSW Government will also accelerate the delivery of the Electricity Infrastructure Roadmap. The best way to put downward pressure on prices is to increase energy supply.
The Roadmap is the State’s primary mechanism for supporting the construction of new electricity infrastructure needed to replace retiring power stations. It is a comprehensive plan to transform our electricity system, and will ensure the reliability and availability of electricity for homes and businesses at the lowest possible cost.
The Roadmap supports the delivery of the types of energy infrastructure that will deliver the lowest cost for the NSW electricity system:
- renewable generation that produces very cheap energy to the system
- transmission that delivers energy to customers
- long duration storage like pumped hydro and firming like gas and batteries that keep the lights on when it is still or dark.
The Roadmap operates by running competitive processes for contracts to deliver the electricity projects needed to keep the lights on and drive power prices lower.
To accelerate the delivery of the Roadmap and put downward pressure on energy prices, the NSW Government will:
- invest $84 million in the key bodies needed to accelerate the implementation of the Roadmap
- establish a Transmission Acceleration Facility
- commit a further $47.5 million to fast track pumped hydro projects in NSW.
This funding is on top of the record $380 million announced in the 2021 Budget to support the delivery of the Roadmap.
The Transmission Acceleration Facility will play an important role in fast tracking the delivery of critical transmission infrastructure. New transmission infrastructure is needed to convey electricity from new generators to consumers however it takes many years to plan and build.
The Facility will be used to undertake development activities to accelerate key transmission projects, including the Central-West Orana Renewable Energy Zone, the New England Renewable Energy Zone and the Hunter Transmission Project.
The first investment under the Facility will be the Waratah Super Battery.
Pumped hydro energy storage has the ability to provide large amounts of long duration storage to keep the lights on when it is still and dark, making it a vital part of NSW’s future energy system. At least 2 gigawatts of long duration storage like pumped hydro will be built in NSW by 2030.
To ensure NSW has a strong pipeline of pumped hydro projects, the NSW Government will commit a further $24 million to the Pumped Hydro Recoverable Grants Program. This funding is expected to expand the pipeline of pumped hydro projects by up to 1.4 gigawatts.
The NSW Government will also invest $23.5 million to undertake feasibility studies to develop pumped hydro projects on key WaterNSW dams throughout the State.