Failure to extend Eraring Power Station's life by two years would have increased the risk of widespread black outs and kept electricity bills higher for longer, expert advice given to the state government indicated.
Energy Minister Penny Sharpe will table the advice in state parliament on Tuesday, three months after it announced a deal with Origin Energy to keep the 2,922 megawatt coal generator running until mid 2027.
The documents include commercial advice, electricity market modelling and an evaluation of the proposed extension arrangement.
They include an Australian Energy Market Operator (AEMO) forecast of a reliability gap if Eraring were allowed to close in 2025 as originally scheduled .
It said alternatives to extending the plant's life, such as increased investment in battery storage and firming capacity, were "not certain" to mitigate the risk.
"We said we would be fully transparent in how we reached this decision and that is what we are doing by tabling these documents today," Energy Minister Penny Sharpe said.
"This agreement will manage an orderly exit from coal-fired power to ensure the lights stay on for homes, businesses and industry while New South Wales delivers the transition to low-cost, reliable renewable energy.
"This temporary and targeted agreement guarantees a minimum supply of electricity until the new expected closure date of August 2027."
Under the agreement, Eraring must generate at least six terawatt hours each year, the equivalent to the typical annual output of two of Eraring's four generating units.
Eraring will maintain its existing workforce of about 220 and has committed to a maintenance plan including environmental protections.
The government also received advice that indicated delaying Eraring's closure would place downward pressure on wholesale electricity prices.
Energy market modelling price forecasts indicate that if Eraring continues to operate to August 2027, time-weighted average wholesale electricity prices are expected to be around $55 per megawatt-hour lower in 2025-26 and $40 per megawatt-hour lower in 2026-27 than if Eraring were to close in August 2025.
The government entered into discussions with Origin about extending Eraring's life after receiving a check-up report of the state's electricity and reliability.
The report, produced by by Cameron O'Reilly highlighted the risk of losing 2080 megawatts of baseload power at a time when the energy grid is undergoing an unprecedented transformation.
"Under any circumstances, replacing a plant like Eraring that provides around 20 per cent of NSW's delivered electricity would have been extremely challenging. With just three-and-a-half years notice, it is almost impossible without reliability and affordability impacts," the report said.
Under the terms of the extension agreement, the government will not make any upfront payment to Origin, but will enter into a "risk-sharing" arrangement if Origin agrees.
Taxpayers would share 20 per cent of any profit Eraring makes during the life of the agreement, but that share is capped at $40 million. If the plant loses money, taxpayers will underwrite 80 per cent of those losses capped at $225 million a year.
Advice received by the government shows that certain price environments may not result in any financial assistance from the state government.
The insurance provided by the state has an inherent value to Origin, even if it does not opt in.
The extension will not impact the achievement of the government's 2030 emissions reduction target.
The documents relating to the extension of Eraring will be available on the Department of Climate Change, Energy, the Environment and Water's website.
