Origin Energy says coal plant closure date open to review
The closure of Australia's largest coal-fired power plant could be brought forward as Origin Energy assesses a "range of scenarios", including the impact of climate change and the influx of renewable energy, which could influence its shutdown date.
After pushing back against a move by shareholder activists last year to bring forward the 2032 closure of the Eraring coal-fired generator in New South Wales by two years, Origin on Thursday indicated it remained open to retiring the facility or winding it down in a staged approach sooner than 2032.
Origin Energy CEO Frank Calabria.Credit:Louie Douvis
Origin Energy chief executive Frank Calabria, when asked about the future of the 2880-megawatt plant, said the energy market was "moving rapidly" and the facility was subject to continual review.
The company was considering "various scenarios" in assessing the plant's future, he said, which factored in the economics of running the plant and the impact of global warming in the wake of this summer's devastating bushfire season.
"We look at lots of scenarios in the way we think about how Eraring should run over time, how we think about its trajectory between now and 2032," Mr Calabria said.
"Bushfires are another reason why we just continue to assess those scenarios … we are certainly assessing a range of scenarios as to how Eraring runs and operates over the coming years."
Origin has left the door open to bringing forward the planned closure of its Eraring coal-powered generator in NSW.Credit:Nick Moir
Nationwide, there have been growing doubts about whether coal-fired generators will see out the length of their licences as the transition to cleaner energy sources, including gas and renewable energy, gathers pace, despite the federal government's insistence that coal is critical to ensuring reliable and cheap electricity.
Market Forces, an arm of Friends of the Earth, argued at Origin's last investor meeting that 2030 was the cut-off date needed in order to limit global warming to less than 2 degrees above pre-industrial levels in line with the Paris agreement. While rejecting the push for a 2030 closure, Origin has repeatedly said it plans to close Eraring "by 2032".
Mr Calabria's comments come as Origin's half-year profit result impressed investors on Thursday, with a strong performance from its liquefied natural gas joint venture, Australia Pacific LNG, in Queensland. Origin's distributions rose 32 per cent to $520 million.
"The wells are performing very well … all the facilities that process gas are performing well, Mr Calabria said.
"You bring those two things together, that's resulting in record production."
The deadly coronavirus outbreak in China has been driving down global oil and gas prices as a travel lockdown affecting millions of Chinese residents weighs on petrol demand, while airlines are trimming flights causing a glut of jet fuel. Origin said the epidemic in China had not made a "direct impact" on the joint venture's exports to China, adding that there had been no declaration of "force majeure" on contracts.
The energy giant's profit was dragged down by the state and federal governments' introduction of fixed basic energy prices, known as default market offers, and the impact of prolonged outages across Eraring and Mortlake power plants.
An ever-rising uptake of household rooftop solar panels and customer focus on energy efficiency also led to a reduction in Origin's electricity volumes for the period.
Stripping out one-off costs, the company's underlying profit – the figure more closely watched by the market – fell 11 per cent to $528 million.
UBS energy analyst Tom Allen said this was an "encouraging" result, coming in above expectations of $511 million. He singled out APLNG's "continued strong performance amid difficult market conditions", and its better-than-expected cash distribution range to Origin of between $1.1 billion and $1.3 billion.
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