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May 23 (Reuters) - Australia's Origin Energy (ORG) and the government of the state of New South Wales (NSW) have agreed to delay the closure of Eraring coal fired power plant, the country's largest, by two years, the power retailer said on Thursday.
Origin will extend operations at Eraring to Aug. 19, 2027, in return for the government underwriting against a share of its potential financial loss.
Eraring provides around 18% of NSW's electricity needs, according to the government.
Origin had previously planned to shut Eraring in 2025, seven years ahead of the original schedule, partly because falling power prices had made it difficult to turn a profit.
However, growing worries about longer-term challenges in creating enough renewable energy to replace capacity lost from shutting down aging fossil fuel plants made the case for delaying Eraring's closure.
Origin will be required to pay the NSW government 20% of Eraring's agreed profit, if any, capped at A$40 million ($26.48 million) per annum, it said.
"This agreement strikes the right balance, with an extension to operations enabling Eraring to continue supporting security of electricity supply in New South Wales..., while making compensation available to Origin in the event economic conditions for the plant are challenging," CEO Frank Calabria said. ($1 = 1.5106 Australian dollars)
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