Marnie runs a bookkeeping business from her home in Sydney's north-west, and most Februarys she watches the same alert scroll across her phone: an Australian Energy Market Operator warning that reserves are tight for the evening peak, triggered whenever a heatwave pushes millions of air conditioners on at once across the grid that keeps the state's hospitals, trains and homes running. She has never actually lost power on one of these afternoons — the warnings exist to trigger a response, not to predict a blackout — but she has learned to read them as a rough scoreboard for how the state's decade-long shift away from coal is actually going. In May 2024, while she was busy with other things, the Minns government announced it had struck a deal to keep Australia's largest power station, Origin Energy's Eraring, running two years past the date its own owner had set for closing it. In January 2026, Origin told the market it was extending Eraring again, this time to April 2029.
Marnie has not changed her electricity retailer or her rooftop solar contract in that time. What has changed, twice, is the government's own account of how close to the edge the transition away from coal is running — and what the primary record says about the pace of the build meant to make Eraring unnecessary.
What the government did
Eraring, on the shores of Lake Macquarie, is Australia's largest power station: four coal-fired units with a combined capacity of roughly 2,880 megawatts, supplying approximately a quarter of New South Wales' electricity (approx.) (Origin Energy, plant data). The state does not own it. Eraring was sold into private hands in 2013, the tail end of a generator privatisation process both major parties pursued through the preceding decade, and Origin has owned and operated it since. Origin had set August 2025 as the date it would close all four units — a commercial decision by the company, not a government mandate.
On 23 May 2024, the Minns government announced it had reached agreement with Origin to keep Eraring running for a further two years, to August 2027, to manage what it called reliability and price risks during the transition (NSW Government, media release, 23-May-2024). The structure is not a subsidy cheque. The state makes no upfront payment. Instead, Origin must decide by 31 March in each of 2025 and 2026 whether to opt in to underwriting for the following financial year; if it opts in, the government can claim up to $40 million a year of any profit Eraring earns, and Origin can claim up to 80% of any losses the plant makes, capped at $225 million a year (NSW Government/Origin Energy, Agreement on Eraring Power Station, 23-May-2024). Across the two underwritten years, that caps the state's maximum exposure at roughly $450 million, against a possible $80 million clawback if the plant is profitable instead — a contingent liability, not a committed spend.
The strongest case
The state's own market operator said the grid was not ready for Eraring to close on schedule
Two AEMO documents do more to justify the deal than any minister's press release. Its 2025 Transition Plan for System Security, published in December 2025, confirmed system-strength and inertia deficits — the stability services a large spinning coal turbine provides almost as a byproduct of running — opening across NSW from 2027-28, based on Eraring's own scheduled retirement date at the time (AEMO, Dec-2025). That is the independent market operator, not the government, concluding the grid's replacement infrastructure was not yet ready to absorb the closure on schedule. Structuring the response as a capped, contingent underwriting arrangement rather than a straight subsidy or a public buyback also protected taxpayers if the gamble paid off, and on the record so far, it has: Origin has not drawn on the arrangement in either year it has been offered, and the government says not one dollar of it has been spent (NSW Government, media release, 6-Feb-2026). Every state retiring ageing coal on a fixed timetable has faced a version of the same trade-off. On this reading, extending Eraring is not evidence the government mismanaged the transition; it is evidence the government listened to its own market operator rather than to a closure date a private company had set for itself years earlier, for commercial reasons the state never controlled.
What has happened since
The May 2024 deal was framed, and largely reported, as a fixed two-year bridge to August 2027. It has not stayed fixed. On 20 January 2026, Origin advised AEMO it would extend the operation of all four Eraring units a further twenty months, to 30 April 2029, citing uncertainty over the reliability of Australia's ageing coal and gas fleet more broadly and the risk to system security AEMO had just flagged the previous month (Origin Energy, ASX announcement, 20-Jan-2026). The decision was exercised under terms already built into the 2024 agreement, but the call to trigger it was Origin's — a private board's read of national reliability risk, not a fresh commitment renegotiated in public by the state. Between Origin's original public closure date and its now twice-revised one, the plant's exit from the grid has moved by nearly four years.
The government notes, accurately, that this later extension has cost taxpayers nothing beyond the contingent liability already priced into the 2024 deal (NSW Government, media release, 6-Feb-2026). But "nothing spent" is a different claim from "no exposure": the underwriting cap of up to $225 million a year stays live for as long as Origin can still opt in, and the state's only real lever over when its largest power station leaves the grid is now a contract with a private company weighing its own commercial calculus — not a date the government sets and controls.
The evidence
The Roadmap that was supposed to make Eraring's closure straightforward is itself running behind its own schedule. The NSW Government's Electricity Infrastructure Investment Act 2020 sets a legislated minimum objective of at least 12 gigawatts of new renewable generation and 2 gigawatts of long-duration storage by 2030 (Electricity Infrastructure Investment Act 2020 (NSW)). By 2025, the government reported enough projects contracted — under agreement, not yet built or connected — to reach more than 70% of the 12-gigawatt target and to meet the storage objective (NSW Government/EnergyCo, project data, 2025). But contracted capacity cannot reach households and businesses until the transmission lines exist to carry it, and that build is the part running late. An independent review the government itself commissioned, the Electricity Supply and Reliability Check Up, was submitted on 4 August 2023 by Cameron O'Reilly of Marsden Jacob Associates and found that Central-West Orana, the state's first renewable energy zone, was already tracking behind its original 2025 online target, with a revised expectation of 2027-28 (NSW Government, Check Up report and government response, Sep-2023). By 2025, project-financing and network-construction updates had the zone's energisation staggered out further still, into a 2028-2030 window (EnergyCo/AER, project updates, 2025) — meaning the delay identified in 2023 has grown, not closed, in the two years since.
The government's own response confirms it read the Check Up as a warning, not a formality. It accepted 50 of the 54 recommendations and, on 29 January 2024, announced a further $1.8 billion package to get delivery back on track: $1 billion to establish the Energy Security Corporation as a government-backed co-investor in storage and network assets, and an extra $800 million for the Transmission Acceleration Facility, taking that fund's total commitment to $2 billion since 2022 (NSW Government, media release, 29-Jan-2024). AEMO's 2025 Electricity Statement of Opportunities, published in August 2025 and updated in October 2025, reinforces why that catch-up spending matters: under a committed-and-anticipated-developments scenario, reliability gaps emerge in NSW, alongside Queensland, South Australia and Victoria, at several points across the ten-year outlook, closing only if the government's schemes and REZ-linked transmission proceed on schedule (AEMO, Aug-2025, updated Oct-2025).
The critique
None of this means the May 2024 deal was the wrong call at the time. AEMO's own findings support the government's case that closing Eraring exactly on Origin's original schedule risked a reliability gap the replacement infrastructure was not ready to fill. The critique is not that the government struck the deal; it is what the deal, and its sequel eight months later, admit about the pace of everything meant to replace it. A Roadmap legislated in December 2020 with a 2030 delivery target had, within three years, an independent review the government itself commissioned finding its flagship renewable energy zone already running one to three years late. By 2025, that zone's own project updates pushed the slippage out further, toward a 2028-2030 energisation window. A government does not need to say the words "we are behind schedule" when its own commissioned reviewer says it for them, and when the state's response is a further $1.8 billion in catch-up funding within months of reading the review.
The second problem is control. NSW sold Eraring into private hands in 2013, and the consequence of that is now plain: the state cannot simply schedule its own coal exit. It can only make the terms attractive enough that a private company chooses to keep the lights on for it. The January 2026 extension illustrates the point precisely. That decision was Origin's to make, triggered under an option the state had already agreed to two years earlier, but not a fresh, publicly negotiated commitment the government could shape in the moment. A state auditing its own energy security should be uncomfortable that the single largest lever over its near-term reliability now sits inside a private board's judgment about the reliability of the entire ageing coal and gas fleet, a judgment the government did not make and cannot override.
The third problem is that "zero dollars spent" describes money drawn, not risk carried, as set out above — and an ageing coal unit competing against a grid with falling solar and storage costs is exactly the kind of asset whose owner might reasonably choose to draw on that cap in a bad year still to come.
Eraring's closure date has now moved twice since the government's own deal was struck — proof the transition is running behind schedule, not proof the plant was ever going to be easy to retire on time.
Finally, there is a distinction the government's own reporting blurs between renewable capacity that is contracted and renewable capacity that is connected. More than 70% of the legislated 12-gigawatt target had agreements in place by 2025, which is genuine progress worth recording. But an agreement to build is not electricity on the grid, and the transmission lines needed to move that contracted power — the renewable energy zones the 2020 Roadmap was built around — are the part of the system that is demonstrably late. Extending Eraring twice is the clearest evidence available that the government itself does not yet trust the contracted pipeline to arrive on the timetable its own legislation set.
The risk to the future
A widening gap between contracts signed and transmission built, with the backstop's own clock running down
AEMO's 2025 outlook is explicit that NSW avoids a forecast reliability gap only if government schemes and REZ-linked transmission proceed on schedule — precisely the assumption the state's own commissioned reviewers found already slipping in 2023, and which later project updates suggest has slipped further since. If Central-West Orana and the other renewable energy zones energise on the 2028-2030 window now being reported, rather than the 2025 date originally promised, NSW approaches Eraring's April 2029 closure with a plant whose owner has twice signalled its own uncertainty about the wider coal and gas fleet, no legislated right to compel a further extension, and a 2030 target still measured mainly in contracts signed rather than megawatts connected. A state that has already needed two extensions to bridge a gap it originally expected to close by 2025 has less room, not more, to absorb a third delay. The households who felt nothing when this deal cost zero dollars would feel the alternative directly — in higher wholesale prices passed through to bills, or in the reserve warnings that already interrupt their February afternoons, arriving more often and with less margin than before.