Four coal units gone from the NSW grid since Liddell shut in 2023, and Eraring’s exit still pencilled in for 2027 even after the NSW government paid EnergyAustralia to keep it running longer than the company originally planned. That’s the headline fact. The quieter fact, the one that matters more, is that the transmission build meant to replace all that capacity is running years behind the generators it’s supposed to connect.
I’ve spent a chunk of the last fortnight going back through AEMO’s connection data for the Central-West Orana and New England zones, partly because readers keep asking the same question in different words: is NSW actually going to have enough firm capacity when Eraring finally closes. The answer isn’t reassuring, and it isn’t catastrophic either. It’s somewhere in the uncomfortable middle, which is the least satisfying place for a grid planner to sit.
What’s actually left of coal in NSW #
NSW still runs four coal-fired stations: Eraring, Bayswater, Mount Piper and Vales Point. Eraring is the big one, roughly 2,880 megawatts and the largest power station in the country, owned and operated by Origin Energy. Its scheduled closure has already slipped once, from 2025 to 2027, after AEMO and the state government both flagged reliability concerns if it left on the original timeline. That extension came with a deal: the NSW government agreed to underwrite some of Origin’s downside risk in exchange for the extra two years of output.
Bayswater, owned by AGL, is pencilled in for closure around 2033, pushed back from an earlier date for similar reasons. Vales Point and Mount Piper run on, with Mount Piper’s owner EnergyAustralia already juggling the wind-down of Yallourn in Victoria alongside its NSW fleet, a balancing act I’ve covered in more detail in EnergyAustralia’s countdown to Yallourn’s exit. The pattern across all four stations is the same: closure dates keep moving right, and every time they move it’s because the thing meant to replace the coal isn’t ready yet.
The REZ rollout, in real terms #
NSW has five declared Renewable Energy Zones under the state’s Electricity Infrastructure Roadmap: Central-West Orana, New England, South West, Hunter-Central Coast and Illawarra. Central-West Orana was meant to be the proof of concept, first out of the gate, and it’s the one I’ve tracked most closely in the Central-West Orana REZ status check. The transmission backbone there, being built by Transgrid, has faced landholder disputes, cultural heritage assessments and construction delays that pushed the in-service date out repeatedly.
New England is further behind again. Acen Australia’s wind and transmission plans in that zone have moved at a pace that would have seemed slow even by the standards of a sector that’s used to slow. I wrote about where that project actually sits in New England REZ: where the build actually stands, and the short version, without using the phrase I’m not allowed to use anymore, is that generators are sitting in connection queues waiting on poles and wires that haven’t gone in the ground.
This is the structural problem with REZs as a policy instrument. You can declare a zone, you can run a tender, you can sign generators up to connection agreements. But the transmission has to physically exist before any of that capacity reaches a customer, and transmission in this country takes years longer to build than the wind and solar farms it’s meant to carry. AEMO’s own Integrated System Plan has flagged this mismatch for several planning cycles running: generation build is tracking closer to forecast than the transmission that needs to accompany it.
Why the gap keeps widening, not closing #
Here’s where I’ll part ways with the comfortable version of this story, the one that blames landholders or environmental approvals and leaves it there. Those are real friction points. But the deeper issue is that NSW committed to firm coal closure dates before it had committed, in practice, to a transmission delivery timeline that could be trusted. The Roadmap legislation passed in 2020. Eraring’s extension negotiation happened in 2022 and 2023. The REZ transmission projects are still, in late 2026, working through easement negotiations and construction staging.
That’s not a criticism of Transgrid or Acen specifically. Transmission lines cross hundreds of individual properties, each with its own negotiation, and under the relevant NSW planning framework every one of those easements can become a dispute. The honest comparison is with Victoria’s VNI West project, which I’ve covered in VNI West: the interconnector stuck in a paddock dispute, where almost identical dynamics have played out. Route disputes aren’t a NSW-specific failure. They’re a feature of how Australia builds transmission everywhere, and the planning system hasn’t caught up to the pace the energy transition demands.
Where NSW differs is the stakes. Victoria isn’t retiring its largest power station on a fixed date while its flagship transmission zone is still mid-construction. NSW is doing exactly that with Eraring.
Batteries as the patch, not the fix #
The Waratah Super Battery near Munmorah is the clearest sign the state has recognised the gap and is trying to buy time with storage rather than wires. I went through its role in detail in Waratah Super Battery: the shock absorber finally earning its keep, and the short version is that it’s doing exactly what it was designed to do: absorbing system strength and frequency shocks, not providing bulk energy through long overnight gaps.
That distinction matters more than most coverage of big batteries gives it credit for. A two-hour battery fleet, which is roughly what the NEM has on average according to AEMO’s published generation data, can smooth a ramp or catch a contingency. It can’t replace 2,880 megawatts of baseload running for ten or twelve hours through a winter evening. I made this argument at greater length in Are big batteries being built for the wrong job?, and nothing I’ve seen out of NSW in the months since has changed my view. Batteries are buying the system time. They are not closing the gap between coal retirement and REZ delivery, no matter how often that gets implied in press releases.
Gas peakers quietly doing the heavy lifting #
Which is why Kurri Kurri matters more to NSW’s near-term reliability than most of the renewable project announcements combined. Snowy Hydro’s gas peaker in the Hunter, after a construction and commissioning process that ran well past its original schedule, is now operational and available to run during the kind of tight evening periods that AEMO flags in its reliability forecasts. I covered the long road to that outcome in Kurri Kurri: the peaker that took the long way round.
It’s a quiet irony that a state pursuing an aggressive coal exit is leaning on gas to bridge the gap its own transmission build hasn’t closed. Nobody in Macquarie Street is going to put that on a press release, but it’s what the dispatch data shows on the tight nights. I’d argue this is actually the sensible call, not a failure of ambition. A firm, dispatchable gas peaker that runs rarely is a cheaper insurance policy than building redundant transmission capacity on a timeline nobody believes anyway.
What AEMO’s reliability forecasts actually say #
AEMO’s most recent Electricity Statement of Opportunities flagged specific periods where NSW’s reliability standard could come under pressure if Eraring exits on schedule and REZ transmission remains behind its original delivery dates. The language in these documents is deliberately careful, framed around “unserved energy” risk under the reliability standard rather than blunt predictions of blackouts, and it should be read that way rather than sensationalised. But the direction of travel across successive ESOO updates has been the same: the risk window around 2027 to 2029 hasn’t been shrinking, it’s been holding steady or growing slightly as both coal closure and transmission dates keep moving.
The AEMC’s own work on transmission planning reform, which followed years of developer and investor complaints about approval timelines, points at the same underlying issue from the regulatory side. The connections process and the social licence problem around easements are both bottlenecks that no amount of generation investment can route around.
Who actually wears the risk if the timing slips #
This is the part that doesn’t get argued honestly enough in public. If Eraring closes in 2027 and the REZ transmission still isn’t fully energised, the system doesn’t fail quietly. Prices spike on tight nights, AEMO issues more frequent market notices, and new gas or battery capacity gets built in a hurry at a premium, paid for eventually through network charges and wholesale costs that flow to customer bills. I’ve written before about who ultimately funds this kind of build-out under pressure in Who really pays for the transmission build-out, and NSW’s situation is a live test case of that argument rather than a hypothetical one.
The state government’s position, consistently, has been that the Roadmap and the Eraring extension together buy enough margin. Origin’s own filings describe the extension as a commercial arrangement with the government covering specific downside scenarios, not an open-ended commitment to keep running past 2027 if conditions don’t improve. That’s a fair, disclosed position. It just means the state is one slipped transmission milestone away from a genuinely uncomfortable 2028.
Where this actually lands #
NSW isn’t going to run out of electricity overnight. The system has more patches available now than it did three years ago: Waratah’s battery capacity, Kurri Kurri’s gas peaking, a REZ pipeline that is moving even if it’s moving slowly. But the margin for error has thinned, and every slipped milestone on the transmission side eats into it further. The state government’s own Roadmap papers acknowledged this tension when they were first published, with language about managing an “orderly” transition. Orderly was always doing a lot of work in that sentence.
The next genuine test comes when Eraring’s current extension approaches its 2027 end date and someone in government has to decide, publicly, whether the transmission is actually ready or whether coal gets a third reprieve. I wouldn’t bet heavily either way. But I’d keep watching the Central-West Orana easement numbers more closely than the press releases out of Macquarie Street, because that’s where the real answer is going to show up first.
– Marcus Wren, Editor
Photo by Mazen Alseh on Unsplash