The Australian Energy Market Operator (AEMO) says it will assess the decision to close Eraring early but believes that additional generation and storage should cover the transmission taken out of the market.

Politicians need to be particularly careful in weighing into the treacherous realm of coal production and coal power - especially at the federal level and in the lead up to an election where independents running mainly on environmental issues are threatening a number of Coalition seats.

Origin has played by the rules in giving governments the required three and a half years notice of closure. It has also announced plans to build a 700 megawatt battery of its own on the Eraring site.

Taylor can virtue signal about his forecast of gaps in reliable generation and (exaggerated) numbers of employees that will be affected, but the reality is the federal government can’t force Origin to keep the power station open.

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.

Origin CEO Frank Calabria

For their part energy companies like Origin and AGL would rather avoid politics and focus on the needs of their important stakeholders - the shareholders.

That is precisely who Calabria is targeting with the decision to close Eraring early.

It’s a clear-cut financial decision based on the economics of running high-cost coal power plants relative to the lower cost renewable energy.

AGL this week also announced a revised schedule for the closure of two of its coal power stations, Bayswater from 2035 to between 2030-33 and Loy Yang A from 2048 to between 2040 and 2045.

AGL’s timing shift is pretty marginal - thus a little easier for Taylor to stomach.

The state governments’ penchant for underwriting renewables has been responsible for a massive increase in supply, which in turn has put enormous pressure on wholesale prices and shredded the earnings of energy companies.

Taking coal-fired energy out of the market makes perfect sense for Origin.

Last year the Institute for Energy Economics and Financial Analysis forecast that Eraring would be the coal generator most likely to be unprofitable by 2025.

As Calabria sums it up, “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.”

And then there is the other reason for Origin ditching the last of its fleet of coal-fired generators - it cuts a big swathe of the company’s scope 1 emissions.

This not only makes Origin more attractive to the growing number of investors that apply a discount to the value of heavy emitters but also makes it more appealing to any would-be corporate suitors, who are loath to have exposure to dirty coal assets.

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