Eraring Power Station: Activists wrote off coal. But it’s back and stronger than ever

Coal is back, baby.

The mineral, a leading participant in the culture wars, along with Aboriginal history, trans-gender rights, global warming and Israel, would have been smiling on Tuesday morning if it could.

Electricity generator Origin Energy disclosed it plans to keep Eraring, the nation’s biggest coal-fired power station, open an extra 20 months until 2029 because the plant makes so much damn money it would insult shareholders to shut it down.

Built on the bank of the picturesque Lake Macquarie in the heady days of cheap coal power in 1984, Eraring became a hate symbol for climate activists because of its contribution to global warming.

Despite a decade of anti-coal campaigns – remember the stop-Adani convoy during the 2019 election? – coal has never been more popular.

Global consumption hit a record 10 billion tonnes last year, driven by India and China, where demand has quadrupled this century, helping give 95 per cent of the world’s population access to almost-always-on electricity.

Connecting up to the grid means more than light. It gives hundreds of millions of people air conditioning, consistent internet access and refrigeration in the home for the first time.

Blackouts at home

In the developed world, which economy is the biggest beneficiary of this leap forward for the poorest? The answer is Australia, which is ranked fourth overall for coal production and number one for the high-value coal used to make steel.

While electricity is becoming more reliable in the developing world, blackouts remain a serious possibility at home, according to Australian regulators, because of the big investments needed to upgrade electricity networks for wind and solar power.

The decision to prolong Eraring’s life is an acknowledgement of what a small group of independent experts have been saying for years: there’s no free ride on wind and solar power.

“It tells us that renewable energy has not replaced the energy and essential system services that coal-fired power stations provide,” said Aiden Morrison, a researcher at the Centre for Independent Studies think tank who predicted the Eraring extension two years ago.

“I don’t think it ever will. I think renewable energy is only easy to have as an extra bit on top of a baseload system.”

Fixing the grid

The problem is more technical than seasonal. Because of how electricity grids operate, they require giant flywheels known as synchronous condensers to keep the current constant.

This function is built into conventional power stations. Condensers have to be connected to grids running on wind and solar power.

In New South Wales, five are needed right now, at a cost of about $170 million each, according to Mr Morrison. Eventually, 17 will be required across the state at a huge cost that will be passed on to electricity bills.

The politician whose judgment looks most questionable from the Eraring extension is federal Energy Minister Chris Bowen.

Resolutely anti-coal, Mr Bowen got into a testy exchange with journalist Chris Uhlmann in 2022 when Uhlmann put the argument to him that keeping coal power stations open longer would be the best way to avoid blackouts.

“No,” he said. “That has been a long-held view of yours and it is not one I agree with. The problem is there is not enough investment in renewable energy.”

Since then, he has argued the reason the grid is unstable and prices are rising is not because of too much wind and solar, but not enough.

On Tuesday, he persisted with the argument. “Coal remains an unreliable source of energy – when coal breaks down, bills go up,” he said, citing a Christmas Eve malfunction at Eraring, which took four weeks to fix.

If the power station is so unreliable, why did the NSW Labor government in 2024 promise to cover any losses at Eraring if Origin kept it open? (Origin has never had to call in the guarantee, a fact NSW Energy Minister Penny Sharpe boasted of on Tuesday.)

Becoming flexible

When Mr Bowen became energy minister in 2022, about three quarters of electricity in the national energy market was provided by coal. It is now 59 per cent. Wind contributes 18 per cent and solar 9 per cent.

One of the reasons coal stations such as Eraring have maintained most of their market share against huge wind and solar subsidies is because they are being run well.

Eraring can cut output by 80 per cent during the day and overnight when demand slumps, and ramp up in the afternoons ahead of peak demand at 7.30pm. If there is too much electricity in the grid, owner Origin Energy pays battery owners to take its power.

Coal power’s unexpected flexibility is one of the reasons Origin’s share price has doubled over the past four years, giving the company a value of $19 billion.

What about damage to the climate from the carbon dioxide released into the atmosphere when coal is burned to drive Eraring’s turbines?

The power station contributes 0.037 per cent of global Greenhouse gas emissions, making it a rounding error in efforts to prevent global warming.