Origin Energy's decision to shutter Australia's largest coal-fired power station by 2025 has been lambasted by the NSW government.
With a generating capacity of 2922 megawatts, the Eraring Power Station at Lake Macquarie, near Newcastle, was initially slated for closure in 2032. It supplies about 20 per cent of the state's power.
Energy Minister Matt Kean says Origin's decision to expedite the closure was out of the government's control.
"I am disappointed by today's announcement and this is a difficult day for the Lake Macquarie community," Mr Kean said on Thursday.
"The planned closure of Eraring is especially tough for its workers, their families and local communities, many of whom have helped power NSW for decades and my expectation is that Origin does the right thing by its workers."
He announced the government would build a separate 700 megawatt battery in the Hunter-Central Coast region to supplement the state's electricity needs.
"We're building the biggest battery in the southern hemisphere.
"I can guarantee it (the battery) will be built before 2025 to keep the lights on," he said.
"The battery will act as a shock absorber to free up more capacity in the system to ensure that users can access more of our existing supply in the system," he said.
The electricity provider also said it would build a replacement battery at Eraring with a capacity of 700 MW.
Mr Kean said he would also announce "a comprehensive jobs package to support those affected communities", within days.
Electricity prices might spike with the shift to renewables and jobs might be affected, he said.
"Our focus is solely based on ensuring that we keep the system reliable and we put downward pressure on prices," he said.
Federal Minister for Energy Angus Taylor echoed the same sentiment.
"This decision is bitterly disappointing for all energy users - from households to small businesses to heavy industry - who rely on affordable, reliable energy to prosper," he said.
"This risks higher prices, like the 85 per cent increase we saw after the closure of the Hazelwood Power Station, and a less reliable grid."
The decision comes a week after rival AGL decided to bring forward the closure of its two biggest coal-fired power plants.
Origin's Chief Executive Frank Calabria linked the decision to changes in the National Energy Market working against traditional baseload power stations, as Origin transitions to zero net emissions.
"The reality is the economics of coal-fired power stations are being put under increasing, unsustainable pressure by cleaner and lower-cost generation, including solar, wind and batteries."
