Engineering the NEM’s Survival After the Eraring Closure in 2027

Whether you run a café, manage a warehouse or simply want to keep the household budget under control, what happens in Australia’s National Electricity Market (NEM) affects you directly. 

The NEM is the single interconnected grid that supplies Queensland, New South Wales, Victoria, South Australia and Tasmania. Right now, in late 2025, it is going through its biggest transformation in decades.

One of the pivotal moments ahead is the scheduled closure of Eraring Power Station in August 2027. Eraring is Australia’s largest coal-fired plant located near Dora Creek on the western shore of Lake Macquarie in New South Wales. 

As an insurance brokerage, we, at Tank, understand the importance of energy reliability. In this blog, let’s have a go at what Eraring’s exit means for the NEM, the risks that remain, the solutions already under way and what it could mean for your power bills and insurance planning.

Know what the 2027 Eraring Coal Plant closure means for your business’ energy reliability.

Why Eraring Matters So Much to the NEM

Located on the shores of Lake Macquarie, Eraring has a nameplate capacity of 2,880 megawatt. This is enough to meet roughly 25 percent of New South Wales’ electricity needs on an average day. 

For decades it has provided the steady baseload power that the grid has relied upon.

Here are the key facts that you must know:

• The plant was originally due to close in 2025 but the NSW Government reached an agreement with Origin Energy in 2024 to keep it running until at least August 2027, with an option until 2029 if required.
• Even with the extension, Eraring experienced significant unplanned outages in 2024 to 2025. On average, each of Eraring’s four units was unavailable for around 6,000 hours, the equivalent of two months.
• When it finally retires, the NEM will lose approximately 2.88 gigawatt of dispatchable capacity in one hit. This is by far the largest single retirement in the market’s history.

The Main Challenges After 2027 Closure

The Australian Energy Market Operator’s 2025 Electricity Statement of Opportunities (ESOO) and Integrated System Plan highlight several risks that can become more pronounced once Eraring leaves:

1. Loss of System Strength and Inertia: Coal units provide physical stability that wind and solar farms do not naturally supply.
2. Evening Peak Shortfalls: The period after sunset when solar output drops to zero but demand remains high or the so-called “evening ramp”.
3. Transmission Constraints: New renewable zones are often far from cities and major transmission projects are running behind schedule.
4. Growing Demand: Data centres, electrification of transport, and industry are expected to push annual consumption higher from 2028 onward.

Without careful planning, these factors could lead to higher wholesale prices and, in extreme cases, supply interruptions.

How the NEM is Being Engineered for Life After Eraring

Fortunately, a considerable amount of work is already in progress. The solutions fall into four broad categories:

1. Rapid build-out of storage and firming capacity

• Nearly 7 gigawatt of new large-scale renewable and storage capacity would be added.
• By mid-2025, Australia had 2.8 gigawatt of grid-scale battery storage installed with a further 12 to 15 gigawatt either under construction or financially committed by 2027 to 2028.
• Origin Energy itself is installing a 700 megawatt or 2,800 megawatt-hour battery on the Eraring site to help reuse existing grid connections. This was done in three stages. 

2. New technologies for grid stability

• Synchronous condensers (large spinning machines that provide inertia without generating power) are being rolled out in NSW and South Australia.
• Grid-forming inverters in advanced batteries can now mimic the behaviour of traditional generators. 

3. Market and policy reforms

• The Capacity Investment Scheme is underwriting new dispatchable renewable projects to ensure they are built on time.
• AEMO is seeking a longer notice period of five years for future coal closures to allow replacement projects to be delivered.
• Wholesale price forecasts for NSW have already fallen by 44 percent for 2026 to 2027 because of the Eraring extension and new supply.

4. Community and workforce transition

• The Australian Commonwealth’s Net Zero Economy Authority is funding retraining and job-placement programs for the direct employees and wider supply chain affected by Eraring’s closure.

What This Means for Households and Businesses

The transition post 2027 Eraring closure can affect your households or businesses. To assess your situation and find the right cover, don’t hesitate to reach out to us at Tank.

For most people, the transition has the potential to deliver lower and more stable electricity prices as cheap renewables and storage displace expensive coal and gas. However, the years 2027 to 2030 remain a bridging period where short, sharp price spikes or reliability events are still possible.

This could mean:

• Increased enquiries about Business Interruption coverage that specifically includes loss of power or extreme price events.
• Growing interest in tailored policies for owners of rooftop solar and home batteries.
• Commercial clients reviewing their exposure to supply chain disruption caused by potential energy shortages.

How Tank Can Help

As an insurance brokerage, Tank’s role is to understand your individual circumstances and then search the entire market to find the most suitable and competitive coverage. 

Whether you are concerned about outage-related losses, rising energy costs affecting your profit margins or the insurance implications of installing your own generation or storage, we are happy to review your current arrangements.

The closure of Eraring in 2027 is a landmark moment but the NEM is being actively re-engineered to remain reliable and affordable. The next few years will reward those who plan ahead.

If you would like to discuss how the changing energy landscape might affect your insurance program, please give us a call at 02 9000 1155 or send us an email at [email protected]. 

Stay informed and stay powered.