Commonwealth Bank economist John Oh has warned that the planned closure of the Eraring Power Station in August 2027 poses significant system security risks for the National Electricity Market (NEM). The Eraring Power Station is a coal-fired power plant located in New South Wales, Australia. Its primary function is to generate electricity for the state and contribute to the overall stability of the NEM.
According to Oh, the transition from traditional synchronous generation from coal and gas to inverter-based renewable energy sources diminishes the inherent stability of the electricity grid. This shift introduces potential shortfalls in crucial areas such as system strength, frequency control, inertia, and overall operability of the NEM.
Oh suggests that until synchronous condensers are fully deployed to compensate for these losses, the Australian Energy Market Operator (AEMO) might be compelled to implement more expensive interventions. These interventions could include activating existing system strength contracts, directing fossil-fuel generators to come online, or, in extreme circumstances, resorting to load shedding to manage grid stability.
These dynamics, as Oh points out, could lead to increased operational costs and heightened risks of market intervention, even if the NEM technically adheres to its overall reliability standards. The reliance on these measures highlights the challenges in maintaining grid stability during the transition to renewable energy sources.
