Eraring was supposed to be gone by now. The biggest power station in the National Electricity Market, 2,880 megawatts of black coal on the shore of Lake Macquarie, was pencilled in for closure by AGL back in 2022 for 2025. It didn’t happen. The exit date has already been pushed once, and the NSW government has been negotiating with AGL on keeping it running longer still. Every time that conversation resurfaces, someone writes the same headline: we’re closing coal faster than we can replace it. I don’t think that’s quite right, and the distinction matters more than it sounds.
The honest read is that Australia isn’t closing coal too fast in aggregate. It’s closing it unevenly, in the wrong order relative to the transmission and firming capacity meant to back it up, and mostly in one state.
The number that actually matters isn’t gigawatts #
Start with what’s true. AEMO’s Electricity Statement of Opportunities has flagged reliability gaps in NSW through the mid-2030s if coal exits proceed on schedule and replacement generation and transmission slip further. That’s a real finding from a body with no reason to talk its book either way. But the gap AEMO is describing isn’t really a shortage of megawatts on paper. Australia has approved, financed or under-construction renewable and storage capacity that, on a nameplate basis, comfortably covers the coal fleet being retired this decade. The gap is about when that capacity can actually be dispatched, on the hottest evening of February, without the poles and wires to move it from where the sun and wind are to where the demand is.
That’s a transmission and firming problem dressed up as a generation problem. Conflate the two and every coal extension looks like a rescue mission. Separate them and the picture gets more specific, and less flattering for the states that haven’t built the wires.
Eraring and the extension that keeps extending #
AGL’s own filings describe Eraring’s role as a bridge, not a destination. The plant is more than three decades old. It burns through coal supply contracts that get more expensive to renew every year. Nobody inside AGL is pretending this is a long-term asset; the company’s public strategy is about managing an exit, not reversing one, as we’ve covered in AGL Energy: coal’s biggest landlord trying to check out early. The extension is a stopgap forced by circumstances outside Eraring’s four walls, mainly the pace of transmission builds in New South Wales.
It’s a bit like a batsman refusing to walk when the scoreboard clearly says he should be back in the shed. Nobody thinks the innings should go on forever. But the umpire — in this case AEMO and the NSW government — has decided the risk of declaring early outweighs the discomfort of letting it run.
NSW’s REZ rollout is the actual bottleneck #
New South Wales set out an ambitious build of renewable energy zones to replace the output of Eraring, Bayswater, Liddell and Vales Point as they close through the 2030s. The rollout is running behind the schedule the state government originally set, as we detailed in NSW’s energy transition: the coal exit meets a REZ rollout running late. Transmission projects that were meant to be energised years ago are still working through planning approvals, landholder negotiations and connection queues. None of that is unique to NSW — grid build timelines have blown out across the country — but NSW carries the heaviest coal-to-renewables handover of any state, and it’s the one where the mismatch between exit dates and delivery dates is sharpest.
Compare that to Victoria, where EnergyAustralia has already brought forward Yallourn’s closure and the Victorian government’s storage and transmission build has kept closer pace, or Queensland, where the state-owned generators are managing an orderly retirement schedule alongside the pumped hydro and public ownership push covered in Queensland’s energy plan: pumped hydro and public ownership. The reliability story isn’t a national one. It’s a NSW-shaped one, with some spillover risk for the interconnected market either side.
Batteries are arriving faster than the debate admits #
The other half of the honest read is that grid-scale storage has moved faster than most of the 2022-era modelling assumed. Big batteries backed by the likes of Akaysha Energy, and the firming fleet built out under state schemes, are now closing the gap between when the sun goes down and when evening peak demand actually bites, a shift we’ve tracked in pumped hydro vs big batteries: which firms the grid?. It’s not a complete substitute for coal’s baseload character. Batteries firm for hours, not days, and a run of cloudy, windless weeks still needs something else in the mix. But the pace of battery deployment has genuinely surprised people who were confidently predicting blackouts three years ago. Follow the money and you’ll notice the capital isn’t waiting for certainty on coal exit dates — it’s already moving.
The Capacity Investment Scheme is doing more of the heavy lifting than it gets credit for #
The federal government’s Capacity Investment Scheme has quietly become the mechanism underwriting a large share of the new generation and storage that’s meant to backfill coal, through underwriting agreements that reduce revenue risk for developers, as covered in is the Capacity Investment Scheme quietly picking winners?. It’s not a subsidy in the traditional sense — it’s closer to a contract-for-difference structure — but it is government picking a pace and a mix, and that means the timing of coal closures is increasingly a policy choice as much as a commercial one. AEMO’s Integrated System Plan and the CIS tender rounds are now more predictive of the closure schedule than the age of the boilers themselves.
Follow the money on who benefits from the reliability scare #
Here’s where I’ll own a view the consensus doesn’t love. Every time a coal plant’s exit date is extended, the loudest voices arguing it was necessary tend to be the same parties with a commercial interest in that plant running longer, or a political interest in avoiding a headline about the lights going out on their watch. That doesn’t make the reliability concern fake. AEMO’s numbers are AEMO’s numbers, not spin. But it does mean the debate gets treated as more binary than it is — close coal on schedule and risk blackouts, or keep it running and accept climate cost — when the actual policy failure sitting underneath both options is a transmission build that hasn’t kept pace with either the closures or the new generation meant to replace them.
The generators extending coal aren’t lying about the risk. They’re also not disinterested referees of it.
The honest read #
The honest read is that Australia isn’t closing coal too fast as a system. It’s closing the wrong plants ahead of the wires that were meant to carry their replacement, concentrated in one state, while treating a transmission delivery problem as if it were a generation shortage. Fix the REZ delivery timeline in NSW and most of the reliability anxiety currently attached to Eraring, Bayswater and Vales Point evaporates on its own terms, without another extension negotiation. Leave the wires running late and it won’t matter how many gigawatts of approved renewables sit in the development pipeline — none of it will show up on the right side of the meter when it’s needed.
I’d rather see the argument reframed that way than keep re-running the same closure-date headline every eighteen months. AEMO’s Electricity Statement of Opportunities and Integrated System Plan, both published on aemo.com.au, are a more useful read than most of the political commentary that follows them, and the AER’s ongoing network revenue determinations, at aer.gov.au, will tell you more about what’s actually holding transmission back than any coal company’s press release will. The next extension decision, whenever it comes, will be a symptom. The wires are the disease.
— Marcus Wren, Editor
Photo by Gabriel Castles on Unsplash