NSW's Eraring move shakes up Brookfield's $18.7b Origin tilt
New South Wales will negotiate with Origin Energy over a possible extension of the 43-year old Eraring Energy power plant after heeding warnings from the market operator.
The New South Wales government's decision to negotiate with Origin Energy over the possible extension of the 43 year-old Eraring coal fired power plant adds potential twists to Brookfield's $18.7 billion bid for the ASX-listed gentailer.
Penny Sharpe, the NSW energy minister, today confirmed that the Minns government would initiate talks with Origin on a possible extension of the 2.8GW Eraring beyond its scheduled August 2025 closure date.
Origin Energy will be in a strong position in these negotiations, market watchers say, since the company has already flagged the closure of the plant and made plans for life beyond it. The cost of extending Eraring’s life has been estimated at between $200 million and $400 million per year. Eraring is profitable but if Origin is able to extract a good deal, it may add weight to arguments in the market that Brookfield is underpaying for the company.
Secondly, Brookfield's Energy Transitions Fund, which would house the Origin Energy Markets business, has strict emissions reduction targets for all of its portfolio companies, in addition to financial return hurdles.
