Families on the Central Coast have been dealt a bitter blow by billionaire coal baron Trevor St Baker who last week announced plans to keep his Vales Point power station running 20 years past its promised closure date of 2029.
In the same week that Origin Energy and AGL announced plans to shutter their coal burning power plants ahead of schedule, Mr St Baker told pro-coal newspaper The Australian that in relation to Vales Point:
“We’ve got a plan to stay open for another 20 years beyond 2030.” [See full article below]
Coal-fired power stations in the Hunter and on the Central Coast are a major source of nitrogen-dioxides (NOx), a key cause of asthma among children. Vales Point power station is a major source of NOx on the Central Coast and beyond.
“Mr St Baker has dealt families on the Central Coast a cruel blow, potentially condemning another generation to dangerously high levels of air pollution,” Nature Conservation Council Chief Executive Chris Gambian said.
“Local families fought for months to make his dirty, dangerous industrial facility stop polluting Central Coast children.
“Sadly, the NSW Environment Protection Authority let them down last December by allowing Vales Point to keep pumping dangerous levels of NOx into the air.
“Mr St Baker’s announcement is just another kick in the guts for parents who have been fighting for their kids’ right to breathe clean air.
“We call on the NSW Government to do whatever is takes to make Vales Point power station shut by 2029, preferably sooner.
“The Central Coast community must not be made to suffer for another 30 years simply to further enrich a billionaire from Brisbane.”
Trevor St Baker in bid to extend coal power as Origin brings forward Eraring plant closure
SENIOR BUSINESS WRITER
9:21PM FEBRUARY 17, 2022
Billionaire Trevor St Baker will reignite plans for a 20-year extension of NSW’s Vales Point coal power station amid fears the early closure of Origin Energy’s giant Eraring plant may lead to market volatility and higher prices.
Mr St Baker, a major clean energy investor and co-owner of Vales Point, said he would rekindle a scheme to lengthen the life of the power station near Lake Macquarie, which supplies about 4 per cent of the national grid.
“We’ve got a plan to stay open for another 20 years beyond 2030,” Mr St Baker told The Australian after Origin confirmed the nearby Eraring plant may close seven years early, by mid-2025, creating a possible generation shortfall in the market.
“The exit of Eraring and Bayswater coming forward could mean it makes sense to hasten this now.”
The 1320 megawatt Vales Point plant, bought for the price of an average Sydney house, is currently due to shut in 2029.
A two-decade extension would go against the moves by Origin and AGL Energy’s early retirement of Bayswater, also in the Hunter Valley, but Mr St Baker said he remained concerned over the loss of the fossil fuel, which can still provide up to 70 per cent of supply in the national electricity market.
“There is no way Australian industry can survive these rapid-fire closure announcements. These power stations should stay in service at least until their retirement dates so we can have a smooth transition in the market.”
While Mr St Baker said he was not interested in any potential buyout of Eraring, Origin left the door open for selling the plant to a new owner, sparking speculation over a potential deal.
After The Australian revealed the details of Origin’s early closure plan on Thursday, sources said a sale to the NSW government was canvassed in the past few months, while private investors may also have held talks on whether a buyout was possible.
Origin chief executive Frank Calabria said all options were on the table, although the energy giant‘s current plan is to build a 700MW battery at the site once the coal plant closes.
“This is the start of a process of submitting the notice of closure, and therefore we’ll continue to assess the market,” he said.
“There’s a lot that can happen over the next three and a half years and we’ll just continue to assess that as we get closer to the day.”
Origin reported an 18 per cent rise in profit to $268m for the six months to December 31 compared to the same time the previous year, while its interim dividend remained at 12.5c per share.
The power giant upgraded its earnings guidance for the 2022 financial year due to surging oil and gas prices, with a new range of between $1.95bn and $2.25bn.
It had previously said it expected earnings of between $1.85bn and $2.15bn. The company’s shares rose 1 per cent to $6.16.
RBC Capital Markets equities analysts Gordon Ramsay and Alistair Rankin told clients Origin’s results were below expectations, but the company’s Australia Pacific LNG joint venture “continues to stand out”.
“A mid-2025 closure (of Eraring) will remove a significant proportion of Origin’s scope 1 emissions and will contribute towards achieving their emissions reduction targets,” they wrote.
Asked if Origin had received interest in Eraring from buyers, Mr Calabria said: “There are always conversations going on in business regarding opportunities that are out there, and that’s part of what we do all the time. We did not run a formal sales process – we’ve not done that.”
The black-coal-fired power station has supplied electricity to households for 35 years and is located on the shores of Lake Macquarie, 40km south of Newcastle.
Australia’s largest coal-fired generator had originally been scheduled to start closing its first unit in 2030, ahead of a full shutdown in 2032, amid broader market tensions as low wholesale prices and cheap renewables put pressure on the fossil fuel.
However, it will now run for just over three more years, presenting a big challenge for market operators as baseload coal exits the system.
Traditionally the country’s big coal generators run round the clock, reflecting both market demand for the fuel but also the difficulty in tweaking output from huge pieces of machinery that can take hours to properly synchronise with the grid.
The relentless surge of cheap and plentiful renewables – solar, wind and hydro – and battery storage is sparking a shift among the big baseload coal producers and threatening the viability of the fuel in the supply mix. Origin is now shutting down some of its Eraring supply after meeting morning demand and firing it up ahead of evening peaks.
Ord Minnett analysts said the closure of Eraring would “likely have a negative impact on valuation (of the company)”. \
“In energy markets, operating conditions remain challenging due to the combination of record low wholesale electricity prices in (the 2021 financial year) flowing through to customer tariffs (this year), and higher wholesale energy procurement costs incurred in the current period,” they said.
“Eraring has been impacted by operational constraints at one of its primary suppliers, contributing to a material increase in both coal and wholesale electricity procurement costs.”
Origin purchased the nation’s biggest coal plant for $660m in 2014 from the NSW government as part of the state’s $3bn power sell-off. Origin had committed to exit coal by 2032, but the announcement on Thursday will mean it will be free of the dirtiest fossil fuel some seven years earlier as it has no other coal generation in its fleet.
Australia’s surging supplies of solar and wind power along with several years of low wholesale electricity prices have slammed Australia’s biggest power companies and forced an acceleration away from coal, despite the fuel still propping up the national electricity market.
The country’s three largest energy companies – Origin, AGL and EnergyAustralia – have also faced pressure from investors to boost their climate change response and cut pollution levels from sources like coal.
Origin chief executive Frank Calabria conceded Energy Minister Angus Taylor could opt for intervention again, depending on the actions of the NSW government and commitments from industry. “You’ve got the NSW government which has mechanisms in place for it, to decide what future energy and capacity it brings into the market,” Mr Calabria said on Thursday.
“It’s entirely a matter for Angus whether he feels he needs to go beyond both of those.”
The government-backed Hunter Power Project was sanctioned last year to pump 1000MW into the National Electricity Market by late 2023. The development was triggered after Scott Morrison set the private sector a 1000MW target to reach final investment decisions on replacement dispatchable capacity once NSW‘s Liddell plant exits, with an April deadline.