Three recently announced giant battery projects, including one on the site of the former Liddell Power Station, will be enough to fill the reliability gap left by the planned closure of Eraring Power Station in 2025, new analysis shows.
The Institute of Energy Economics and Financial Analysis (IEEFA) has modelled the impact of the federal government's first tender under the Capacity Investment Scheme.
Under the changes to the scheme, announced on 23 November, the federal government will underwrite 23GW of variable renewable generation by 2030 (along with 9GW of storage), accounting for most of the new large-scale renewable generation capacity required.
The remaining 13GW would need to come from other sources, such as the NSW Electricity Infrastructure Roadmap, which has a goal of 12GW of renewables by 2030.
The 500-megawatt (MW), two gigawatt-hour (GWh) Liddell battery project was among the beneficiaries of the recent Capacity Investment Scheme announcement.
The battery will have an expected 20-year operational life and will be built in three stages. The first phase of the project involves the installation of 150MW of battery storage.
The other battery projects that benefited from the Capacity Investment Scheme were the 400 MW/1600 MWh Orana battery and 65 MW/130 MWh Smithfield battery.
The IEEFA analysis revealed the scheme initial tender would create sufficient new capacity to fill the gap created by the closure of Eraring.
The new modelling has come to light at the same time as the NSW government and the plant's owner, Origin Energy, hold talks about the possibility of keeping the 2,880 megawatt plant open beyond its scheduled August 2025 closure date.
The IEEFA analysis says extending the life of Eraring would undermine the financial viability of the remaining coal generators, and possibly lead to their early closure.
"Essentially, propping up Eraring is like robbing Peter to pay Paul, with other coal power stations left vulnerable," lead IEEFA electricity analyst Johanna Bowyer said.
In one example, Vales Point Power Station's capacity factor could drop as low as 9 per cent if Eraring's closure was delayed.
Ms Bower said the closure of large power stations was typically associated with increased energy prices.
"This could happen post the Eraring closure. Building new capacity can help contain price rises, as can demand-side measures such as energy efficiency, demand flexibility and distributed energy resources (DER) uptake.
"What this modelling illustrates is that no matter which way we cut this, there isn't enough space left in the market for Eraring after 2025. It just isn't needed.
"Given that the first Capacity Investment Scheme auction was overwhelmed with bids, if the NSW Government wanted some additional insurance to safeguard reliability, it would be better off running another auction as soon as possible.
"At the same time, it should also look at how to accelerate and expand mechanisms to improve energy efficiency and reduce peak demand."
The battery storage system, which is due to come online in the final quarter of the 2025 calendar year, will have a dispatch duration of two hours.
Origin has the option to increase the battery to 700 megawatts and four hours dispatch duration in the future.
