Deep in the pages of Origin Energy's latest annual report is a number that seems surprisingly good.
In a table spelling out where the company generates its electricity is a line item showing the giant Eraring coal-fired plant pumped out energy worth more than $2 billion in the 12 months to June 30.
It was a result that was more than 20 per cent higher than the year before, itself a whopping 65 per cent higher than in 2020-21.
Revenue at Eraring, like so many other generators across Australia's biggest electricity market, has been soaring thanks to record wholesale power prices.
In spite of the results, the talk this week once again centred on why Eraring is scheduled to close in just two years and why the New South Wales government is under growing pressure to throw the plant a lifeline.
So why is there such a disconnect between the apparent financial health of power stations such as Eraring and the reality behind the decisions to close them down?
Tim Buckley, a director of Clean Energy Finance, says appearances can be deceiving in the commercial world.
While Eraring may look profitable, he says, it struggles to make a buck in an environment increasingly dominated by green energy.
"It's about risk mitigation," he says.
"This isn't about making a shedload of money.It's about Origin not losing a lot of money and not being held responsible for running the biggest coal-fired power plant in Australia."
Firing up powerful risks
According to Mr Buckley, Eraring, more than any other coal plant, is being buffeted by the winds of change sweeping through Australia's electricity system.
Not only is it huge —Eraring is Australia's single biggest generator —the plant is heavily exposed to black-coal prices.
Mr Buckley notes that although Eraring is benefiting from a federal government-imposed price cap of $125 a tonne for thermal coal, that relief has a finite life.
And when it ends, he says Eraring will once again be running the gauntlet of a coal market in which prices have soared to stratospheric highs in recent years.
"When you are talking about $200-a-tonne cost of coal, which is the spot price today, at three million tonnes a year, it's a lot of money.
"You tell me what the coal price is going to be in a year's time, let alone two years' time.
"What board is going to sign off on keeping Eraring open and take a massive coal risk?"
Fundamentally, though, Mr Buckley says Origin is simply bowing to the inevitable by shutting Eraring seven years ahead of schedule in August 2025.
He says not only is Eraring one of the most exposed power plants to volatile coal prices —if not the most —it is also among the hardest hit by the influx of renewable energy on the system.
This is because Eraring — like all ageing coal-fired power plants — needs to run more or less flat out around the clock.
It was not designed to be flexible.
Sun setting fast on coal
But amid a flood of green power — particularly during the middle of the day when solar output was highest — it was having to run despite the daily cratering of prices.
"If I go and flood the NSW market with a shedload of solar, that's going to gut Eraring, it's going to gut Bayswater because they have zero flexibility," Mr Buckley says.
"So they will be buying coal at expensive prices in order to lose money with every unit of electricity they generate.
"They can't turn off.
"And by the way, it's predictably sunny every day which means they lose money, predictably, for six or eight hours every day.
"In the middle of winter in NSW, the power price was negative 9 per cent of the time."
Added to this equation, Eraring is believed to cost about $250 million a year in maintenance just to stay in business because of its size and age.
A spokeswoman for Origin says the company is constantly evaluating the wholesale power market and "this will help inform the final timeline for closure" of Eraring's four units.
But the spokeswoman notes the market is ultimately moving in ways that are unfavourable to plants like Eraring.
She points out that Eraring's sales are recorded as "pool revenue", which fails to account for the need for Origin's retail business to buy the power to sell to its customers.
Once this is accounted for, she says Eraring lost money in 2021-22 and made only "modest returns" in the most recent financial year.
"Conditions in the [national market]continue to change rapidly and are increasingly not well suited to traditional base-load power stations," she said.
"Origin's proposed exit from coal-fired generation reflects the continuing, rapid transition of the [market]as we move to cleaner sources of energy."
Renewables 'out of runway'
Matthew Warren, the principal at consultancy Boardroom Energy, says it's for these reasons that the owners of coal-fired power plants are understandably seeking to close assets prematurely.
But Mr Warren says it's also why Australia's energy transition is facing a reset, particularly the federal government's green power target of 82 per cent by 2030.
He says replacing the capacity of coal-fired plants such as Eraring, which are not dependent on the weather and can run on demand, is "a very difficult, expensive and challenging" task.
Crucially, though, he says it's not happening nearly fast enough.
"In order to close any coal-fired generator, you have to have replacement generation in place, and logically at the moment that's a combination of large-scale renewable projects and gas [peaking plants]with some batteries as well.
"You need all of those things.
"The problem renewables have is they've sort of run out of runway with the existing transmission network and we need to build new transmission to connect new renewables.
"And we're hitting headwinds both in terms of capacity and in local politics in getting the transmission built."
For Mr Warren, this tension at the heart of the switch — bringing on enough "low or zero-emissions" capacity to replace the retiring coal — was fast approaching a crunch point.
When push comes to shove
And he says an inevitable consequence is that governments will have to keep coal plants running for longer than they might like.
To that extent, he notes Western Australia and Victoria have already moved to shore up the availability of coal plants in their states.
What's more, he says it's probable the Minns government in New South Wales will be forced to step in and ensure Eraring stays online for longer.
"I don't think governments are tapping the brakes [on the transition], I just think the pace is running out of steam," Mr Warren says.
"There's not a lack of will and there's plenty of capital for that sort of investment, but we don't have the capacity on the network to keep building at the rate we have.
"That means this transformation is going to slow down for a while, and that's why governments are rationally seeking and making sure the existing generators are still on because we need the power until we can replace them.
"We're getting mugged by reality."
Simple fix for a big problem?
Stephanie Bashir, the founder and boss of Nexa Advisory, says governments throwing public funds at coal plants to keep them alive would be a bad use of money.
In the case of Eraring, Ms Bashir notes reports that keeping just half of Eraring open beyond its scheduled closure date would cost NSW taxpayers about $300 million a year.
"Rather than thinking about whether we need to extend and delay closures of expensive and unreliable coal power stations that are subsidised by taxpayers, we should be talking about what is it going to take to close these down on time," she says.
"Because even if we extend them and keep them open, it does not mean reliability.They are ageing generation plants."
Clean Energy Finance's Mr Buckley says keeping the transition on an even keel is a daunting job, but he argues the way forward should be clear.
"It's a big problem, and the simple way around it is to build renewable energy firmed by batteries, which there is zero commodity price volatility.
"That's where we've got to get to."