Times of need have seen a major NSW coal power station come in handy.

In a recent surge of high temperatures, the Eraring coal-fired power station, which is slated for closure in 18 months, has emerged as a linchpin in New South Wales' electricity grid, providing up to 30 per cent of the state's power needs. 

This contribution underscores the plant's role, especially as owner Origin Energy discusses the facility’s future with the state government.

Late last week, amid soaring demand triggered by the heat, Eraring reportedly supplied 16.5 per cent of NSW's electricity. The operational capacity of every coal power unit in the state was maximised, leaving little margin for error, according to Dylan McConnell, a senior researcher at the University of New South Wales.

The electricity market saw wholesale prices spike to $16,600 per megawatt-hour at times, potentially adding pressure on the negotiations between Origin and the NSW government concerning the extension of the life of the Eraring generator, which is Australia's largest at 2,880 megawatts.

The discussions are further complicated by factors such as the anticipated increase in coal costs for Origin, following the expiration of a price cap on NSW coal. 

The electricity demand in NSW, including the estimated contribution from rooftop solar, has reached new highs, continuing reliance on traditional energy sources even as the state explores cleaner alternatives.

Paul McArdle from Global-Roam says it is a “very tall order” to replace Eraring's capacity by its scheduled closure date in August 2025. The plant's ability to meet a substantial portion of the demand during peak times illustrates the tightness in the NSW market and the challenges ahead in ensuring energy security.

The broader energy sector is also grappling with the financial and technical challenges of integrating renewable sources, which often lead to lower wholesale power prices and operational issues for coal-fired plants.